Cogent’s earnings fall but PhillipCapital still positive

SINGAPORE (Dec 4): Logistics player Cogent Holdings reported a 4% y-o-y rise in revenue to $35.3 million for 3QFY2017 ended September, but earnings fell 6% to $7.4 million. The group saw better volumes in the container depot management and transport management businesses. However, earnings were affected by higher contract services charges as well as storage and handling costs. Also, depreciation charges rose 33% to $3.2 million as Cogent started accounting for the depreciation of some container depot facilities in May.

Following the release of the results, Phillip­Capital analyst Richard Leow maintains investors should reject a privatisation offer from Cosco Shipping International (Singapore) Co at $1.02 a share. Earnings growth visibility for Cogent is still clear amid an expected pipeline of jobs from the Jurong Island Container Depot project and its student hostel on Holland Road, he says.

Leow thinks Cosco’s offer undervalues Cogent, which he thinks is worth $1.12 a share. “Minority shareholders should take partial profit to avoid tying up capital while the offer remains open and reject the offer,” he says. “If the delisting is successful, minority shareholders will receive $1.02 anyway. If the delisting fails, minority shareholders will remain shareholders of Cogent, a listed subsidiary of Cosco.”

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