7 Jul 2020

RM600 Million Contract Win For PDZ ?

RM600 million contract win for PDZ? | PDZ Holdings Bhd, which has been trading quite actively in the last one month has won a logistics contract worth about RM600 million from a Chinese e-commerce operator.
There is a lot of talk that PDZ may have signed the deal with one of China's top e-commerce companies in China.

While we have no further details on who it signed the deal with, it is good to know that the top e-commerce companies in China are Alibaba, Taobao and Tmall.

It is learned that PDZ will offer its logistics services for a period of two to three years, further improving the demand for its freight transport, including container liner services. 
Could this be the reason why the company's stocks have been trading higher these past few weeks? The stock, which has been trading in the range of 3 to 4 sen since late 2018 started to rise in May this year from 4 sen on May 15 to close at 8.5 sen yesterday.

Some analysts believe that the stock may trade limit-up this week upon hearing the news of the RM600 million deal.
PDZ had been actively trading above 10 sen prior to February 2018. The stock was trading between the range of 10 sen and 33 sen and fell to below 10 sen when the economic conditions became weaker.
The Covid-19 pandemic has caused logistics activity and transportation as well as e-commerce to build up as more and more people are purchasing household items and other necessary products online as they fear traveling outdoors.
Even with the recovery of MCO, consumer sales are increasing online as people continue to look at the various platforms to buy goods.

PDZ's business has picked up since March this year when the movement control order was implemented.

The company registered higher revenue of RM1.22 million for the current quarter ended March 31, 2020, compared to the preceding year corresponding quarter of RM1.04 million, due to the higher volume transported by the firm between January and March.
It recorded a net profit for the three months under review, compared to the preceding year corresponding quarter mainly due to the higher revenue and lower administrative expenses.
PDZ told the stock exchange after announcing its financial results recently that economic activity is expected to gradually pick up in second half 2020 and to register a positive recovery in 2021.        
Notwithstanding this, PDZ will continue to monitor and strive for efficient cost management of its business, while continuing to look for related business to provide enhancement to the group's existing and future earnings, it said.