In this briefing:
We spoke with SITC International (1308 HK) on the impact of the COVID-19 outbreak. Its cargo volume has now returned to 80% of the normal post-CNY level with relatively stable freight rate, but unit cost for 1H20 will be higher due to lower utilisation. The exit of competitors provides it the opportunity to gain market share and further expand into Southeast Asia, which is positive to its long-term development.
Similar to all transportation companies, SITC will experience a tough 1H20 with immense pressure which weakens its profitability in the period. However, SITC is among the most solid ones in the sector, with net cash on hand of over US$170m at end-FY19. Its share price is also resilient – down by just 9% from its pre-outbreak peak of HK$9.95.
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