4Q24: Worse loss than expected
We are disappointed in 4Q24 results, with larger losses than expected, brought by low revenue and higher other expenses. KEX reported a net loss of Bt2.6bn, more than double the losses of Bt1.1bn in 4Q23 and Bt1bn in 3Q24. In 1Q25F, we expect a YoY fall but improvement QoQ. We maintain UNDERPERFORM and cut our DCF-based TP to Bt0.9 from Bt1.7 (7.8% WACC and 1.5% LTG) to reflect our earnings downgrade. Although share price has plunged 38.5% YTD, underperforming the SET by 26.8%, we see no catalyst to lift it; in fact, there is a greater chance of downward pressure from a possible cash call in 2H25F, as we expect its equity base to turn negative.
4Q24 results weaker than expected. KEX reported a net loss of Bt2.6bn, more than doubling the losses of Bt1.1bn in 4Q23 and Bt1bn in 3Q24; we had anticipated a stable loss YoY at Bt1.1bn. Behind the poorer performance was lower other revenue in tandem with a Bt308mn increase in other expenses. This brought the full year net loss to Bt5.9bn, worsening from the net loss of Bt3.9bn in 2023 and our forecast loss of Bt4.5bn. Revenue was Bt1.7bn, sinking 31.3% YoY and 30.9% QoQ as it moved to less reliance on the e-commerce platform or SKA, where revenue contribution dropped to 20% of total revenue from 36% in 3Q24. It did not specify the drop in 4Q24 parcel volume, but noted that overall volume in 2024 fell 23%, implying a significant YoY and QoQ drop in 4Q24.
Operating cash flow breakeven is priority in 2025. The company held an analyst briefing after releasing results and its tone was negative. Management’s top priority in 2025 is to turn operational cash flow up to breakeven point from a negative Bt2.4bn in 2024 by using cost optimization and focusing more on high-yield customers, C2C and CKA (previously called B2B). However, we saw no concrete sign of the effectiveness of this strategy reflected on its 4Q24 P&L. It admitted that net profit will still be in red, although less so in 2025. The industry remains highly competitive and this is likely to hang on for 2-3 years. KEX is in the process of gauging the effect of the dissolution of its Kerry Cool business (60% stake) on the P&L.
Expect 1Q25F to fall YoY, but improve QoQ. We expect 1Q25F earnings to fall YoY on lower revenue as it puts less reliance on the e-commerce platform, plus it will take time for the cost optimization program to bear fruit. On a QoQ basis, we expect other expenses to be lower with a small rise in revenue as we expect volume to pick up QoQ in 1Q25F due to fewer holidays.
Fine-tuning assumptions. We revise down our 2025F to reflect weaker-than-expected 2024 results and now expect a net loss of Bt4.2bn from Bt3.5bn. Based on this we see a risk its equity will turn negative again in 2H25F.
Risks and concerns. Potential for another cash call as its equity base could turn negative in 2H25. Key ESG risks are brand management and cybersecurity and data privacy.
