Kerry Logistics Earnings: International Freight Forwarding Outlook Still Weak; Shares Undervalued

Kerry Logistics Network reported in-line 2023 revenue but missed our estimates for consolidated segment profit and core net profit by 6% and 15%, respectively. Our 2023 estimates included contributions from the discontinued operations of loss-making Kerry Express (Thailand), or KETH, which suggests that KETH’s 2023 loss was larger than our forecast. We are pleased that KLN has distributed KETH to shareholders and will focus on its strength in international freight forwarding. Our 2024-26 earnings forecasts are largely unchanged, and we maintain our fair value estimate of HKD 13.20 per share. We continue to view no-moat KLN as undervalued.