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Daily ShareChat: Frieghtways

By Jenny Ruth

Friday 24th December 2010

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 Jenny Ruth

Freightways has come through the recession in great shape with earnings proving to be relatively resilient and its balance sheet in a very strong position to resume expansion opportunities, either organic or acquisitions, says Rob Mercer at Forsyth Barr.

"Freightways' express package business is finally seeing trading patterns stabilise and, despite volumes remaining subdued, our confidence has increased that Freightways' earnings momentum should turn positive, leading to earnings upgrades for financial 2012," Mercer says.

The emphasis in Freightways' information management division in New Zealand and Australia has switched from acquisitions to organic growth. It is opening three new storage facilities in Sydney, Perth and Adelaide during the year ending June 2011 and the financial benefits should be more evident in 2012, he says.

"In New Zealand, the rate of growth in storage demand for Freightways' new storage facility in Auckland is exceeding expectations."

After several years of Freightways' earnings coming in slightly behind market expectations, the company is now poised for double-digit growth, Mercer says. His forecasts for 2012 are at the top end of consensus forecast but he expects other analysts to begin to upgrade their forecasts.

Mercer is forecasting normalised net profit will rise from $28.9 million in the year ended June this year to $30.0 million next year and to $37.3 million in 2012.

 

Recommendation: Buy.



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