Daily ShareChat: Mainfreight

By Jenny Ruth

Monday 7th December 2009

Mainfreight's second quarter result showed a marked improvement on the previous two quarters although forward orders for the March quarter are still well down on a year earlier, says ASB Securities analyst David Boyce.

While there is still some way to go in the rehabilitation of Mainfreight USA, stability and recovery are now within sight, Boyce says.

Mainfreight reported a $12.2 million pre-abnormals net profit for the six months ended September. Although that was down 28.2% on the previous first half, it was 25.4% above Boyce's forecast.

"The company notes that November trading has been promising but remains cautious in its outlook commentary," he says.

Boyce has raised his forecast net profit for the full year by 20.8% to $30.6 million which compares with the $40 million the company earned in the year ended March. He has also raised his valuation from $4.67 a share to $5.26.

"We believe Mainfreight's strategy of offshore expansion for growth and diversification remains intact but our confidence in Mainfreight USA earnings remains brittle, despite the improvement in the second quarter," he says.

"The strong New Zealand domestic freight franchise is still generating solid cashflows despite the economic slowdown, providing the base to build the global business on."

Investment rating: market perform

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