GDEX ... Sep11

Inet Research

1. 4QFY11 Results Highlight / Review
- GDEx delivered steady growth on the back of higher demand for its express delivery services.

- Chalked up y-o-y revenue growth of 18.3% to RM25.3m, and PBT growth of 26.2% to RM4.2m
in the quarter.

- Stock has retraced. Trading at FY12 PER of 29.3x and EV/EBITDA of 11.4x, we upgrade GDEX to
BUY.


2. FY11 Results review:
- FY11 financial results came in within our expectations. Topline revenue growth of 13.7% was achieved
driven by higher demand in logistics services on the back of an increasing outsource trend for the delivery
of goods and services in the country.

- FY11 PBT increased by a higher 19.5% to RM9.9m, attributed to the company’s success in improving
operational efficiencies, even as fuel and staff costs rises.
Dividends

- On 25 August 2011, GDEX has proposed to declare the final dividend of 1.25 sen per share in respect of
the financial year ending 30 June 2011 pending approval from shareholders. This translates to a dividend
yield of 1.5sen.

3. Earnings Outlook
- In a highly competitive operating environment, GDEX seems to be doing the right things in driving
efficiencies and delivering steady growth in its logistics business. Management indicated its commitment
to reinvest into the company to further strengthen its position in the industry. In FY11, such reinvestments
amounted to RM29m. The company’s fleet size has since expanded from just under 300 trucks and vans
earlier in the year to about 335 now, and staff strength has also increased from >1,300 to currently >1,700.

- Management’s main focus is to continue improving its service quality, streamlining its process flows at and
increasing handling capacity to tap into the growing outsource trend in the express delivery business. In
that respect, the company’s handling and sorting capacity in its central hub is expected to double when its
new warehouse becomes fully operational next month.

- The partnership with Singapore Post Limited (SingPost) is strategic, and over the longer term, both parties
should be able to reap the benefits of tapping into each others’ customers and products base to further
enhance growth. (SingPost currently holds 22.1% in GDEX via a private share placement in March 2011 at
RM0.80 per share)

4. Valuation and Recommendation
- The stock has retraced from its recent highs. Based on the current share price of RM0.89, GDEX is trading
at PER of 29.3x and 23.7x in FY12 and FY13 respectively, and EV/EBITDA of 11.4x and 10.2x in the
respective years. We upgrade GDEX to BUY, whilst maintaining our price target of RM1.10.