Knutsford Express Realises 304.5% Increase In Bottom-Line YTD

• Knutsford Express Services Limited (KEX) Limited recorded a net profit of $68.3Mn for the third quarter that ended February 28, 2023. This represents a 75.9% increase in profitability when compared to the $38.8Mn recorded over a similar period in 2022.
• Given the Q3 results, coupled with the strong performance in the first half of the financial year, net profit totalled $211.4Mn for the nine months ended February 2023, up 304.5% (or $159.1Mn) year-over-year.
• Revenue for the quarter was up by 55.3% y-o-y to $467.9Mn. Similarly, the YTD showed a 65.4% (or $506.5Mn) increase in company revenues to $1.3Bn. This was driven by reduced mobility restrictions, increased local and international travel, as well as its strategic efforts to diversify its revenue streams as seen by the significant investments made towards its courier and rental services.
• However, administrative and general expenses were 41.4% (or $293.8Mn) higher in the nine months relative to the same period last year. Despite higher expenses, operating profit grew by 325.7% (or $212.7Mn) as strong revenue growth outpaced increased costs which translated into a 13.3 percentage point (pp) increase in the operating margin to 21.7% in 2023.
• Going forward, as tourism continues to rebound and as the company continues to expand its courier and rental services, it is expected to generate additional diversified revenue, making it more resilient to downturns in the economy thereby aiding long-term growth.
• KEX’s stock price has increased by 32.4% since the start of the calendar year. The stock closed Monday’s trading session at $11.74 and currently trades at a P/E of 21.3x which is above the Junior Market Others Average of 21.1x. This higher P/E ratio is likely reflective of its expected growth trajectory.

(Sources: JSE & NCBCM Research)