GWC on track to turn FCF positive on annual basis: Report

Doha-based major logistics firm Gulf Warehousing Company (GWC) is on track to turn free cash flow (FCF) positive on an annual basis, QNB Financial Services (QNBFS) said in its company report on Sunday.

With the company’s major capex cycle coming to an end, QNBFS said, it expected 2017 FCF to turn positive after reporting a small positive FCF in the first half of the current financial year.

“Our estimates call for a FCF yield of 5 percent in 2017 and 13.5 percent in 2018,” the report said.

The report, however, said that seasonality and the ongoing blockade might impact the third quarter results of the company.
“We project third quarter revenue and net income of QR204 million and QR50 million respectively. We are revisiting our model in light of the current environment and are lowering estimates and target price,” the report said.

Besides normal seasonality, the blockade could shave off 2-3 percent off company’s quarterly net, primarily affecting its storage and freight forwarding. The report highlighted that the company’s Bu-Sulba Logistics Hub would drive growth for 2017 and 2018. This QR840 million project, which is targeted towards small and medium enterprises (SMEs), has added more than 200k sqm in net leasable area to GWC’s portfolio after the first quarter of 2017.

“This project is currently running at 70 percent utilisation and we expect this to conservatively average around 80 percent for 2018,” the report said.
“We rate GWC an accumulate with a price target of QR53 as news flow on development of new warehousing facilities are expected to drive GWC stock price.”

The report has also highlighted that corporate restructurings would boost outsourced logistics solutions of the company. International expansion would also work as a catalyst for the company, the report said.

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