Kerry Express shares dive after 3Q profit misses estimates completely

Shares of Kerry Express Thailand (KEX), the parcel delivery operator, fell over 6 per cent on Thursday, after the company announced a poor net profit in the third quarter which was nearly 100 per cent below the market forecast.

KEX opened the morning session at 34.50 baht, down 6.12 per cent from its prior closing. 

The company reported a third-quarter net profit of only 12.8 million baht, down 96 per cent both year-on-year and quarter-on-quarter. The results also fell short of market expectations by 97 per cent.

Kerry’s poor outcome was due to a pricing strategy to gain parcel volume, according to the company’s statement, as the competition among parcel delivery companies intensified.

This pushed the operating cost much higher than expected, even though it recorded 48-per-cent growth in parcel volume during the quarter.

Last week, KEX traded at an all-time low of 32 baht amid concern over weak earnings.

An industry insider had told Thai Enquirer on the condition of anonymity that “the company’s earnings are likely to soften because of intense competition in the parcel delivery market.” 

The Covid-19 has boosted the delivery industry as e-commerce trends emerge when people spend more time at home.  Other well-known delivery companies in Thailand are Flash Express, J&T Express, and Ninja Van.

An analyst at KTB Securities slashed down KEX target price from 40 baht to 27 baht following the weak results and rated ‘Sell’ on the stock. 

Kerry’s 2021 full-year earnings projection was also revised down to 702 million baht, a drop of 50 per cent year-on-year, according to KTB.

“Due to heavy competition on express delivery business that will likely persist throughout 2022, we advise investors to sell until the pressure subsides,” said KTB analyst.

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