RE: April...4 May 2023 11:48
Ports – you say you see a lot more DPD vans …..but that’s to be expected, isn’t it? DPD is a much, much bigger company than DX. However, as a minnow, Express has plenty of scope to increase its market share in a growing market, which should boost its profit margin through operational leverage (mind you, its operating profit is already fast approaching £18m, i.e. a respectable 10% operating margin on close to £180m turnover).
So I feel quite comfortable about the investment in depots and parcel handling equipment, which should also produce plenty of efficiency and productivity gains. Bottom line is that we still have some way to go before organic growth runs out of steam.
Clearly, we’ll never see the same SP growth as when the company went from basket case to recovery. But, relative to its earnings growth prospects and healthy cash position, the SP is definitely underperforming at the moment, which I can only imagine is for the reasons I’ve already set out.
Though, as I speak, it looks like today could be a turning point. But then you never know with daily SP movements, especially on AIM…