Silk Logistics Holdings Ltd

Cyan C3G Fund has updated its investment thesis on Silk Logistics Holdings Ltd (SLH), maintaining its position in the company following a solid financial performance despite broader market weakness. SLH reported a 24% increase in revenue and a 15% rise in underlying EBIT, alongside an 8.4 cents per share fully franked dividend, equating to a yield of approximately 5%. The recent acquisition of Secon Freight Logistics is expected to significantly boost revenues and be earnings accretive, further strengthening SLH’s outlook. Cyan C3G Fund notes that, despite these positive developments, SLH’s share price has not reflected the underlying performance, trading at a price-to-earnings multiple of just 8x — a substantial discount compared to sector peers like Mainfreight and Qube, which trade around 20x. With the full integration of Secon anticipated in the second half of FY24, the Fund believes the market may soon recognize SLH’s value, potentially driving stronger investor interest. Cyan C3G Fund continues to hold SLH given its robust growth, yield, and relative valuation appeal.

Cyan C3G Fund has updated its investment thesis on Silk Logistics Holdings Ltd (SLH), reaffirming its position in the company despite recent share price volatility. SLH, which operates in port-to-door landside logistics and supply chain services, has faced broader market pressures and sector-specific challenges linked to slower economic activity, particularly in consumer discretionary sectors. Over the past year, the stock declined from highs of $2.55 to lows around $1.60, though it showed signs of recovery in December, rallying to $1.85 despite the absence of any material company news. Cyan C3G Fund acknowledges the likelihood of a softer December half result—an expectation already reflected in market pricing—but continues to hold SLH based on its attractive valuation (P/E below 8), strong dividend yield (above 5%), and potential for long-term earnings growth. The Fund sees SLH as well-positioned to benefit from future economic recovery and believes current price levels present compelling value for the long term.

Cyan C3G Fund continues to hold Silk Logistics (SLH) despite a 15% decline in share price. The company’s recent result highlights the impact of challenging trading conditions, with slowing customer demand and subdued import container volumes affecting short-term performance. While revenue and EBITDA improved by 8%, the bottom line saw a decline due to higher depreciation and lease expenses. However, Cyan C3G Fund remains confident in the medium-term growth story for SLH. With a PE ratio of 9.6x, an EV/EBITDA of 4.0x, and a fully franked yield of over 4%, the market appears to be undervaluing the company’s growth potential. The strong balance sheet, with over $20m in cash, provides additional comfort, and Cyan C3G Fund sees significant upside over the next two years.

Cyan C3G Fund sold its position in Silk Logistics Holdings (SLH) following a takeover offer from DP World Australia at $2.14, which represents a significant premium. The acquisition, to be executed through a Scheme of Arrangement, is supported by the Board and is expected to complete in the first half of 2025. With the stock trading close to the takeover price and considering the low likelihood of a counter bid, the Fund decided to sell its shares on the market. This move was made to free up capital for other market opportunities that better align with the Fund's investment strategy.