Thought of giving my opinion on EXPO with the published results with info I gathered from my research avenues; will start off with the below summary on results with last years data points.
While most of above are self-explanatory let me give my perspective on what we can expect in coming quarters;
SCENARIO I - HIGHLY PESIMISTIC VIEW
1H EPS - 3.21
2H EPS - 1.16 (25% of Q2 EPS delivery in coming two quarters considering on a conservative model)
Total estimated EPS = 4.37
Estimated Market value = 43.7 (Market of 10x Multiplier)
SCENARIO II - REALISITIC VIEW
1H EPS - 3.21
2H EPS - 2.32 (50% of Q2 EPS delivery in coming two quarters considering on a conservative model)
Total estimated EPS = 5.53
Estimated Market value = 55.3 (Market of 10x Multiplier)
SCENARIO III - HIGHLY OPTIMISTIC VIEW
1H EPS - 3.21
2H EPS - 3.48 (75% of Q2 EPS delivery in coming two quarters considering on a conservative model)
Total estimated EPS = 6.69
Estimated Market value = 66.9 (Market of 10x Multiplier)
Notes (As at 09.11.2020)
Current Market P/E = 10.36
Sector P/E = 46
In depth evaluation of the Financial Performance in 2Q20
How will EXPO maintain/ increase the same Q2 profits; If you analyze the data well, you will understand the reduction in the total reported volumes (SGH info) vs Q1 ( Drop of 35%) while an significant increase in profits.
How is this possible in a scenario where comparative C19 impact was lesser compared to Q1? My hypothesis is the stabilization of their general business along with a partial support from PPE transportation which should be less than Q1. Which gives an indication on how they are no more only a company which depends only in PPE transportation. This also revalidates with the use of significantly higher number of charter flights to transport a significantly lesser volume vs Q1 (25% more).
My takeout completely will be a continuation of EXPOs strength on their ability and agility to deliver business requirements with a larger number of charter flights will deliver even higher EPS in coming quarters with a help of an increased PPE transportation with the current C19 development vs Q2.
This pushes me to put my expectation towards a SCENARIO I - HIGHLY PESIMISTIC as the minimum to be on the safe side. However, valuations can be reassessed with 3Q20 earnings which I will still keep my hopes towards the SCENARIO II - REALISTIC VIEW; with a Dividend expectation of Rupees 1.80~2 with company’s historical dividend payout ratio. (Average 30%)
PS : For all the critics who still wants to check only the NAV, my submission is to check global giants like Amazon, Uber and even most of the established companies who works on a no | minimum Fixed assets policy to have the advantage on flexibility | agility to market volatilities.
For those who think of Expo as a COVID stock, I think we need to move away from that assumption. Although Expo benefited from C19, Q2 results clearly indicate they are not dependent on corona. They used COVID to fundamentally change the company. Everyone in the forwarding industry now know of Expo as a logistics powerhouse in Asia. I believe it will remain that way even after COVID ends
Note - Not a BUY or SELL Recommendation; Just sharing my views only. Please read more about the company in depth and take your positions taking calculated risk as EXPO reached many heights from very low levels.