CTI Logistics rebound doesn’t go unnoticed

K&S also sees share price wipe out recent low scores

CTI Logistics rebound doesn’t go unnoticed
Nice things are being said about CTI


Two of the few Australian-listed trucking and logistics companies have seen their share prices head north and CTI Logistics’ move has been noticed in online markets media while K&S Corporation is yet to garner comment.

CTI is at 94 cents in mid-afternoon trade, a long way from its high point in December 2013 of $2.65 but up from 70 cents at the end of April.

The rise gathered pace at the end of May after founder Davie Watson sold his shares, the first time he says he has sold any since starting up the group 45 years ago.

that were picked up by finance firm Forager Funds Management, giving the Sydney investments operation 7.24 per cent of CTI.

In a commentary on its website, headlined ‘Cooling WA economy creates opportunity’, Forager notes the recent weakness in CTI’s returns but looks to brighter times ahead for the Western Australian-headquartered T&L provider.

"Once the economy recovers CTI should bounce back. Its 30-year old delivery network is a hard asset to replicate," Forager says, justifying the purchase with the words "attractive valuation and management’s great track record".

"Furthermore, the flooring business should continue to grow as it benefits from a new bigger warehouse.

"Based on the 2017 half-year result, CTI should be able to earn net profits of about $6m for the full year.

"This implies it’s trading at a multiple of about 10 times these ‘depressed’ earnings.

"Importantly, the company has net tangible assets of $63m and $20m worth of franking credits. These provide today’s investor downside protection."

Otherwise low-profile finance news services Rockville Register and Melville Review noted the apparent shift in fortunes with statements such as "showing near term bullish signs" and "traders may be looking to capitalize [sic] on market trends as we move into the second part of the calendar year".

Neither mention K&S, which has a similar if somewhat more volatile upward ride, from $1.45 in May to $1.70 today.

Around the start of the rise, Linfox, which has a habit of buying listed trucking companies’ shares, raised its holding from 11.58 per cent to 14 per cent.

The prices trajectory was unaffected by a K&S stockmarket advisory two weeks later that it had settled 2007 claims over subsidiary DTM’s Dandenong warehouse fire at  a cost of $1.5 million after facing claims of $10 million.

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