MFT - Mainfreight. Global Freight & Logistics

[winner69]

Media market update -.

Mainfreight retreated 0.8% to $89.26 after equity analysts trimmed their valuations – partly due to higher discount rates – and noted the company was unlikely to keep growing at the speed it has during recent times.

[Peitro]

$89 is about right with the assumption of zero growth going forward.

[Muse]

Honestly - assuming MFT can generate NPAT of $325m in FY22 - I'd be gobsmacked if it could retain that figure and not go backwards the next few years. I'm not selling as a long term investor - I think its an incredible company smartly building out its network - but my best case scenario is flat for many years. My more realistic view is it declines and 4 or 5 years to get back to FY22. As a bonafide capital account investor my commercial rational for holding the company hasn't changed. Tax paying traders - well - I'd probably sell too.

[BlackPeter]

Mainfreight - one of these blue chips where everybody always seems to agree that they are too expensive - just the market has a different view. Always wondered how it is possible that the market is disagreeing with the experts which are supposed to form the market - but maybe the experts who form the market are not the experts who talk about the market?

I bought into Mainfreight at peak Covid (well, in 2020 this is) - and my only regrets to date are that I didn't buy more of them at that stage when they've been on special. You see - these bl**dy diversification policies. Always trust your favourite broker when they tell you that transport companies do well towards the end of a financial crisis.

Reduced slightly above $90 to stick with my diversification policies (maybe not so bad) ... but still kept a significant parcel.

Question is - are they really too dear and should I sell?

Looking into the fundamentals:

forward PE (3 years) is 29.4. Not cheap.
forward earnings CAGR is 16.5. Well, maybe 29.4 is cheap after all?

Grahams formula returns a value of $122.50 ... but sure, if we modify the parameters according to beagle ... it is only $78.25;

Sigh. Share still looks reasonably priced, but not cheap. So - how did they do after the last really big crisis (the GFC)?

MFT during and after GFC - Copy.JPG

Actually - they went in 4 years after the end of the GFC in early 2009 from $3.30 to $10.50. Not too bad after an economic crisis, isn't it? 35% p.a. appreciation.

Maybe a reason to keep the shares?

Company is well managed and they use the current profits to improve their presence and network all over the globe, as any prudent business man would do.

I think they still have lots of runway left.

I shall keep them (and manage them within my diversification policies).

I think its a company too good to not be part of a well diversified portfolio.

[RupertBear]

Mainfreight - one of these blue chips where everybody always seems to agree that they are too expensive - just the market has a different view. Always wondered how it is possible that the market is disagreeing with the experts which are supposed to form the market - but maybe the experts who form the market are not the experts who talk about the market?

I bought into Mainfreight at peak Covid (well, in 2020 this is) - and my only regrets to date are that I didn't buy more of them at that stage when they've been on special. You see - these bl**dy diversification policies. Always trust your favourite broker when they tell you that transport companies do well towards the end of a financial crisis.

Reduced slightly above $90 to stick with my diversification policies (maybe not so bad) ... but still kept a significant parcel.

Question is - are they really too dear and should I sell?

Looking into the fundamentals:

forward PE (3 years) is 29.4. Not cheap.
forward earnings CAGR is 16.5. Well, maybe 29.4 is cheap after all?

Grahams formula returns a value of $122.50 ... but sure, if we modify the parameters according to beagle ... it is only $78.25;

Sigh. Share still looks reasonably priced, but not cheap. So - how did they do after the last really big crisis (the GFC)?

MFT during and after GFC - Copy.JPG

Actually - they went in 4 years after the end of the GFC in early 2009 from $3.30 to $10.50. Not too bad after an economic crisis, isn't it? 35% p.a. appreciation.

Maybe a reason to keep the shares?

Company is well managed and they use the current profits to improve their presence and network all over the globe, as any prudent business man would do.

I think they still have lots of runway left.

I shall keep them (and manage them within my diversification policies).

I think its a company too good to not be part of a well diversified portfolio.

Great post thanks BP

[alokdhir]

Mainfreight - one of these blue chips where everybody always seems to agree that they are too expensive - just the market has a different view. Always wondered how it is possible that the market is disagreeing with the experts which are supposed to form the market - but maybe the experts who form the market are not the experts who talk about the market?

I bought into Mainfreight at peak Covid (well, in 2020 this is) - and my only regrets to date are that I didn't buy more of them at that stage when they've been on special. You see - these bl**dy diversification policies. Always trust your favourite broker when they tell you that transport companies do well towards the end of a financial crisis.

Reduced slightly above $90 to stick with my diversification policies (maybe not so bad) ... but still kept a significant parcel.

Question is - are they really too dear and should I sell?

Looking into the fundamentals:

forward PE (3 years) is 29.4. Not cheap.
forward earnings CAGR is 16.5. Well, maybe 29.4 is cheap after all?

Grahams formula returns a value of $122.50 ... but sure, if we modify the parameters according to beagle ... it is only $78.25;

Sigh. Share still looks reasonably priced, but not cheap. So - how did they do after the last really big crisis (the GFC)?

MFT during and after GFC - Copy.JPG

Actually - they went in 4 years after the end of the GFC in early 2009 from $3.30 to $10.50. Not too bad after an economic crisis, isn't it? 35% p.a. appreciation.

Maybe a reason to keep the shares?

Company is well managed and they use the current profits to improve their presence and network all over the globe, as any prudent business man would do.

I think they still have lots of runway left.

I shall keep them (and manage them within my diversification policies).

I think its a company too good to not be part of a well diversified portfolio.

I have learnt from holding them since 2010 ...longer u keep them happier u r . U r very lucky to buy so cheap during Covid selling ....now keep them forever should be theme ...after all u cant loose at all ...its only WIN WIN for u . ....One way to go around diversification compulsions of a good stock is to value them at buy prices not market values ...that lets u hold blue chips longer even if they had a great run recently ...

[Muse]

Mainfreight - one of these blue chips where everybody always seems to agree that they are too expensive - just the market has a different view. Always wondered how it is possible that the market is disagreeing with the experts which are supposed to form the market - but maybe the experts who form the market are not the experts who talk about the market?

I bought into Mainfreight at peak Covid (well, in 2020 this is) - and my only regrets to date are that I didn't buy more of them at that stage when they've been on special. You see - these bl**dy diversification policies. Always trust your favourite broker when they tell you that transport companies do well towards the end of a financial crisis.

Reduced slightly above $90 to stick with my diversification policies (maybe not so bad) ... but still kept a significant parcel.

Question is - are they really too dear and should I sell?

Looking into the fundamentals:

forward PE (3 years) is 29.4. Not cheap.
forward earnings CAGR is 16.5. Well, maybe 29.4 is cheap after all?

Grahams formula returns a value of $122.50 ... but sure, if we modify the parameters according to beagle ... it is only $78.25;

Sigh. Share still looks reasonably priced, but not cheap. So - how did they do after the last really big crisis (the GFC)?

MFT during and after GFC - Copy.JPG

Actually - they went in 4 years after the end of the GFC in early 2009 from $3.30 to $10.50. Not too bad after an economic crisis, isn't it? 35% p.a. appreciation.

Maybe a reason to keep the shares?

Company is well managed and they use the current profits to improve their presence and network all over the globe, as any prudent business man would do.

I think they still have lots of runway left.

I shall keep them (and manage them within my diversification policies).

I think its a company too good to not be part of a well diversified portfolio.

Do as you like BlackPeter - obviously this forum isn't for advice but for mulling over the pro's & cons and tailwinds & headwinds of the listed market.

the 'experts' you quasy deride as being out of touch with the market are just mindful of the elephant in the room - the freight rate boom that has directly contributed (in large part) to npat doubling in 2 years.

Ask yourself the following questions and be guided by your own perspectives
* will freight costs remain high forever or if they fall by how much and over what length of time
* mft doing a hell of a lot of good stuff in building out their footprint - how much of the increase in earnings is due to that and not the spike in freight rates and demand? if they continue to grow their footprint can they offset a potential decline in freight rates?
* how will rising interest rates impact sentiment around high PE companies
* how long is your horizon
* what is your commercial rational for holding them

I wouldn't be surprised if they beat consensus NPAT of 325 this year so there could be more good news to come - does that influence your perspective or is it moot in the longer term?

[Beagle]

Do as you like BlackPeter - obviously this forum isn't for advice but for mulling over the pro's & cons and tailwinds & headwinds of the listed market.

the 'experts' you quasy deride as being out of touch with the market are just mindful of the elephant in the room - the freight rate boom that has directly contributed (in large part) to npat doubling in 2 years.

Ask yourself the following questions and be guided by your own perspectives
* will freight costs remain high forever or if they fall by how much and over what length of time
* mft doing a hell of a lot of good stuff in building out their footprint - how much of the increase in earnings is due to that and not the spike in freight rates and demand? if they continue to grow their footprint can they offset a potential decline in freight rates?
* how will rising interest rates impact sentiment around high PE companies
* how long is your horizon
* what is your commercial rational for holding them

I wouldn't be surprised if they beat consensus NPAT of 325 this year so there could be more good news to come - does that influence your perspective or is it moot in the longer term?

Thanks FM

I think people should be mindful that their net profit has more than tripled in the Asian region and quadrupled in America.
Its not that hard to understand that when the price per container falls back from the exceptionally elevated level's, (I understand for example it hit $40,000 per container at one point between China and N.Z.) to more normal level's of $2-3,000 MFT's commissions and fees will take a commensurate hit.

I feel sorry for MFT's customers paying these usurious costs, price gouging anyone ?

If BP and some others want to ignore the elephant in the room then all I will say is I wish them the best of luck with that. Its not for me.

[alokdhir]

Best judgement about holders and non holding experts will come with time ...Market and SP will be the best judge ...also long term investors believe in company and management not current situations ....its management's job to fulfil their brief ..ie to grow the company . If freight rates will get normalised then interest rates will also get controlled as inflation will be managed better ...so overall situation will remain almost similar for management to do their job well .

[iceman]

MFT has nothing to do with the extra ordinary high shipping rates around the World at the moment. The large international shipping companies are the companies charging these rates.
There is no evidence to support claims about MFT price gouging. Importers & exporters in NZ as well as their thousands of customers overseas, have many options and competitors to the services MFT supplies and would & could easily move to a competitor if price gouging was happening by MFT.

There is little question that these high prices are unsustainable long term and need to come down and are likely to do so in a couple of years. However I don't think it is realistic to expect us to ever see containers costs like we had in 2018-2019, particularly given the high inflation period we are in and will be for quite a while yet. It's simply not going to happen.