Hong Kong-based Kerry Logistics is poised to make acquisitions in the express sector in south-east Asia as well as purchase a majority stake in a US freight forwarding company as it continues to roll out its expansion strategy.
At a pre-earnings conference call last week, Kerry Logistics Network (KLN) revealed that it had identified express targets in Singapore, Philippines and Indonesia, according to a research note from investment bank, Jeffries, quoting the group’s management, a copy of which CEP-Research has obtained.
As for the acquisition of an as-yet unnamed US freight forwarder, this will be completed and announced in less than two months with KLN acquiring a 51% stake of the target, the note added.
When contacted by CEP-Research no one was immediately available to comment at KLN.
The group's budgeted capital expenditure of US$2 billion in 2016E, flat y/y, includes the purchase price of the US freight forwarder and the express targets in three countries, the note added.
KLN will report its full year 2015 results on 23 March. In 2014 it had posted a turnover of US$2.7billion.
Last year, the group announced two acquisitions to expand its international freight forwarding (IFF) business in the Middle East and in Canada following new joint ventures in Oceania in autumn 2014. Also in 2015, Kerry bought a controlling stake in Able Logistics, an international freight forwarder headquartered in Dubai and offices across UAE, Saudi Arabia, Oman and China.
In addition, the company acquired a majority stake in two Canadian freight forwarding firms. Total Logistics Partner Ocean Consolidators Inc. and Total Logistics Partner Air Express Inc. are focused on the Asia-Canada trade. With these acquisitions Kerry added Montreal and Toronto to its worldwide network.
Kerry Logistics offers both domestic and international express services with subsidiary companies in Hong Kong, mainland China, Taiwan, Thailand and Vietnam.
These include Top Gun Express Centre Asia (Hong Kong), Kerry EAS Logistics (Beijing) and CF Express (Taiwan) which offer international express door-to-door services. Shandong D-Express Logistics (mainland China), Kerry Distribution Thailand (Bangkok) and Kerry Express Vietnam (Ho Chi Minh City) are domestic express operators.
Services range from urgent same-day delivery to 3-day economy services. Value-added services include web tracking, web service coverage enquiry, hold at location, Saturday delivery and delivery by appointment.
E-commerce development also forms part of KLN's expansion strategy. Last September, it announced that it had taken the pioneering step of introducing six ‘logistics robots’ into its main warehouse to speed up e-commerce fulfilment operations.
Reviewing KLN’s performance in 2015, Jeffries' research note went on to highlight that the group had been “successful in navigating through macro headwinds: KLN made positive progress across all segments, despite the decelerating growth in China. Core net profit achieved high single-digit growth in 2015.
“KLN’s Thailand and Taiwan operations were strong. However, management acknowledged that the depreciation of the Thailand Baht (THB) and the new Taiwan Dollar (TWD) will impact consolidated result.”
Turning to KLN’s 2016 outlook, the note said that management expects the Integrated Logistics (IL) operations in China will perform better in 2016.
