Global Recovery In Travel Supports Revenue Growth At KEX

• Knutsford Express Services Limited (KEX) reported a net profit of $45.40Mn for its nine months ending February 28, 2022, which is a significant turnaround from the $60.64Mn net loss recorded last year. 
• Much of the improvement in KEX’s net profit is attributed to the ongoing global recovery in travel which has led to a strong rebound in revenues. Revenues grew by 69.7% moving from $456.37Mn to $774.41Mn. 
• KEX’s financial performance is expected to improve in line with the recovery in the tourism sector, and the full withdrawal of restrictions on movement which will support domestic travel. 
• However, the current rise in fuel costs is expected to be a significant headwind for KEX as this may have a negative impact on its margins. Despite this, management sees this as an opportunity to increase its ridership as motorists may choose to enjoy the cost savings associated with traveling across the country by utilising KEX’s services. 
• KEX’s stock price has declined by 4.6% since the start of the calendar year. The stock closed Thursday’s trading session at $7.93 and currently trades at a P/B of 5.5x which is above the Junior Market Sector Average of 5.3x.

(Source: Company Financials and NCBCM Research)