PETALING JAYA: Freight Management Holdings Bhd (FMHB) has a defensive growth profile with undemanding valuations and consistent track record in paying out dividends.

       It recently obtained an updated approval letter from the Malaysian Investment Development Authority (Mida) to carry out integrated logistics services and e-commerce fulfilment hub activities as an expansion project.

       This involves a minimum investment of RM245mil in capital expenditure (capex) to be deployed over a five-year period. The tax savings from the project is expected to contribute positively to earnings, said RHB Research.

       The development of an e-commerce fulfillment hub in Shah Alam qualifies the group for an investment tax allowance based on 60% of total capex to be offset against 70% of statutory taxable income.

       It recently obtained an updated approval letter from the Malaysian Investment Development Authority (Mida) to carry out integrated logistics services and e-commerce fulfilment hub activities as an expansion project.

       However, the scheme has yet to be carried out pending Mida’s finalisation of the fine print – which was the reason behind the latest follow-up letter and the project reclassified as an expansion project.

       Though no commencement date has been fixed thus far, but assuming this expansion project begins from financial year 2022 onwards, RHB believes that with an annual investment outlay of RM50mil and minimal debt funding, FMHB is expected to register tax savings of about RM5mil per annum.“All else equal, this represents a 13-15% boost to bottomline over FY22-26, ’’ RHB said.

       It continues to hold a “buy’’ on the stock with a target price of RM1.05 a share.

       However, it cited key downside risks to its call including a weakening in global trade flows and higher-than-expected operational expenditure.