Q&A Opportunity Day Q3/2021
How is the outlook of 4Q21? and in terms of revenue and margin?
Given KEX's proactive pricing strategy & e-commerce year-end promotional campaigns i.e. 11.11, 12.12, the company expects the parcel volume to grow in the coming months. And with proven track record of cost saving, the company will continue to effectively manage costs, meanwhile having to spare resources for service quality assurance. Such action might partially impact the margin.
Do you expect any disruption on labour supply in 4Q21, as experienced in 3Q21? And if so, how dynamic is the impact?
The pandemic situation during 3Q21 was considered relatively severe and affected many areas in Thailand. Such circumstance complicated resource planning, especially labour supply. Now with the country's reopening and the ease of lock-down measures, we believe similar supply chain disruptions might happen in 4Q21. However, the company prioritise the safety of our employees & customers, and will continue to uphold service excellence and resource preparation for operations in the pandemic environment. In 3Q21, KEX remained the only operator with zero operational seizures. However, the cost impact is expected to gradually declines as the pandemic situation tones down and volume acquisition grows.
What is the outlook of price per parcel in 4Q21 relative to 3Q21? What's the portion (%) of fuel cost from the total delivering cost? And how does KEX handle the rising fuel price while the parcel price is decreasing?
Fuel cost accounts for approximately 9-10% of the total delivering cost and the rising fuel price is not the major factor of declining profit margin. However, the company continuously improve the operational efficiency and route planning to utilise cost. The drop in profit margin is caused by temporary expenses from the preparation of spare resources and additional capacity expansion. KEX had to make short-term investment in its margins to prepare extra operating resources for service quality assurance during COVID-19 crisis and new capacity expansion to handle increases in volume during the coming months.
What's the roadmap & the investment budget of 2022 as well as KEX's expected return on investment?
The company yearly allocates approximately THB 1,000 - 2,000 million for investments. The 2022 investment plan & roadmap are currently in progress and yet to be submitted for the supervision of the Board of Directors. However, such budget will be allocated mainly for business & network expansion, platform efficiency enhancement and upgrade to create economies of scale, in pursuit of retaining as the market leader in short, medium and long term.
Is/Are there any potential M&A deal(s) in 2022?
According to the company's diversification strategy, the company will expand the businesses surrounding express-related area to diversify and welcome additional profit and revenue streams. Throughout 2021, the company has developed business initiatives, both done in-house & through partnerships with market leaders, e.g. Kerry Cool and Kerry Wallet. Similarly, the company continuosly seek M&A opportunities, and expects to see the completion of deals by 2022.
What is KEX's expectation on revenue from Kerry Cool in 2022?
Betagro, which is our subsidiary's major shareholder, is Thailand's leading food and agricultural manufacturer with significant base-load contribution, which will serve as the pontial demand from day 1 of the operations. Kerry Cool will initially serve B2B customers and will gradually expand to C2C market by 2Q22. The company expects to see relatively more significant revenue contribution in 2022 onwards, and in medium-long term, the revenue contribution is expected to be 20% of total revenue.
E-commerce platforms are running their own delivery network. What is KEX's view on that? Is there any concern?
KEX has remained the major operator serving e-commerce platforms in Thailand. KEX is well-trusted by major e-commerce and social commerce platforms owing to our gauranteed service quality, nationwide service coverage, strong track record of cost management as well as continuous commitment to integrate technology to improve the services and products. Additionally, we have a proven track record of effective cost management where we efficiently utilise our operating resources and leverage on the economies of scale. Given our cost advantage, we believe it is more cost-effective for the e-commerce platforms to outsource our service, rather than operating in-house.
Who were involved in the recent big-lot trading at THB 38/share in the past two weeks? Should similar event be expected?
Subject to trading confidentiality, the commpany is not able to give clarification on that matter.