Covid has turned industry fortunes favouring EXPO performance since the pandemic struck, with earnings increasing nearly 12x for 9M FY21. Volumes although suffering a setback has been duly compensated by higher air and sea freight rates, which has seen four fold increase since mid - 2021.
The 1H FY21 performance was boosted by orders seen on Personal Protective Equipment (PPE) with charter flights fetching higher rates. Although PPE orders have seen a substantial decline during the 2H FY21, we believe freight rates would remain high in the short to medium term owing to constraints in procurement, disruptions and closure in airport and ports due to the pandemic situation. EXPO being a specialised apparel freighter has seen a gradual increase in volumes, albeit still not at pre-pandemic levels. The resumption in vaccine roll out in USA will have a positive comeback on volumes, which we believe will accrue in the 2H of FY22E. The diversification into freighting of tech, pharmaceutical and perishable goods has been encouraging, with tech seeing promising growth.
With freight rates anticipated to remain high for the foreseeable near future coupled with the steady growth in US trade lane, we believe EXPO is set for a steady bottom-line performance in FY22E, albeit lower than the hyped performance seen in FY21E.