[Transportation Stocks] KGW Group | 12Invest

Recently, the moderator has noticed that everyone is eyeing transportation stocks. Today, I will introduce a light asset transportation stock, KGW Group Berhad (KGW, 0282), and I believe you will gain some insights after reading it.

From the current market trend, the Red Sea incident has caused the cost of many shipping companies to rise. The reasons include: 1) the need for higher costs to hire maritime professionals, 2) the need for more expensive insurance, and 3) the need to use longer routes, such as transferring to Cape of Good Hope. These factors directly affect the supply chain and transportation costs.

It is understood that the shipping cost per 40ft container has nearly doubled (this is an average value, not a specific route). Although it has not yet returned to the high level during the pandemic, it is still higher than normal.

Let me give you a real example. The transportation cost of a 20ft container (TEU) from Shanghai to North Europe has skyrocketed from USD2,530 in mid-March 2024 to USD7,400. This shows how much the cost has increased.

So, what does KGW's shipping cost have to do with today?

Of course it is related; KGW is a transportation company listed in 2023, mainly involved in sea freight and air freight between Malaysia and the United States, but sea freight is still the majority.

From my observation, KGW's shipping fees have likely increased recently, especially with the economic recovery (more container shipping) and many businesses being vigilant about potential supply chain disruptions after the pandemic. Therefore, the company's performance should continue to improve.

Disclaimer:

The moderator is not a licensed stock analyst, so we will not provide any buying or selling advice. If needed, you can seek advice from a licensed stock analyst or a licensed stock broker.

The moderator currently holds the position of Marketing Representative at iFast Capital Sdn. Bhd. and TA Securities Holdings Berhad, and is also an independent financial content writer who does not provide financial advisory services.

At the time of writing this article, or in the short term (within 3 months), the moderator has an interest in investing or already holds shares in the above-mentioned companies. Unless new developments occur during this time, readers must check the independence of this content.

Finally, all the content shared above is based on personal information obtained through various channels, and the content mentioned in the article is for reference, learning, education, and news purposes only, and not for professional financial, investment, or trading advice. If you want to receive trading advice, please consult professional stock analysts or investment banks, and determine the risks and potential returns on your own. It is hereby reiterated that 12Invest is not responsible for the accuracy, completeness, correctness, or validity period of any shared content or views. All decisions made after reading the article are the reader's own responsibility. Remember, all investments carry risk, so take measures to protect yourself.

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