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Chasen Logistic


Time for move upwards after breaking the trendline

Technicals are very good with several moving out of oversold region. 33c will be my cutloss point so this menas my risk/reward is 1:1. Hence do enter small lots if needed.


TWO TRENDS are positive for homegrown equipment relocation specialist, Chasen: First, the robust outlook on semiconductor demand.  Second, escalating labor cost in coastal Chinese cities is making factories move inland.
Chasen is a niche logistics player for relocating sophisticated equipment, such as those used in wafer fabrication, IFT LCD panel production, chip testing and assembly, solar panel and pharmaceutical manufacturing.

”We command about 80% of the Singapore market for relocation of sophisticated equipment,” said Mr Eric Ng, Chasen’s independent director who spoke at CIMB’s investor meeting on Tue.

Given its position, the boom in global demand for semiconductor sales this year is auguring a strong set of results for Chasen’s financial year ending Mar 2011.

On the same day, iSuppli upped its forecast for this year’s global semiconductor sales growth to 35.1%, up from its previous forecast of 30.9% issued in May.

Rising prices, inventory buildups by manufacturers in response to strong consumer demand for electronic products and richer chip content in key electronic products like smart phones and advanced LCD-TVs were cited by the market research agency for the electronics industry as factors contributing to this year’s semiconductor boom.

What’s more, Singapore’s semiconductor sector posted a whopping 89.3% growth during the first half of this year.

Chasen’s business is project based, with lumpy revenue trend, but it is looking for M&A opportunities with recurring revenues.

“Projects give better margins, but we also need business segments with recurring revenues,” said Mr Ng.

Currently, Chasen’s relocation business in China has only got MNCs as customers but its strategy is to enter joint ventures to tap on the partner’s local customer network.

For example, in May, it formed a JV with Sinotrans Air Transportation Development, a PRC-listed airfreight and delivery agency with a network of 85 branches and 300 logistics outlets in China.

In Feb, it entered a joint venture with its Shanghai engineering and fabrication subcontractor to break into the PRC construction market.

CIMB has a ‘Buy’ call on Chasen with target price at 56 cents.

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