Warehousing and storage company GKE Corp is enjoying a “good start to the year” with enhanced medical supply stockpiling in Singapore and China’s infrastructure boom, says CGS-CIMB Research analysts Ong Khang Chuen and Kenneth Tan. 

Ong and Tan are maintaining their “add” call on the company with a raised target price of 18.4 cents from 18 cents. 


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“According to management, GKE’s warehouse is currently fully utilised due to enhanced stockpiling by some customers, and the company is looking to further optimise its customer base to focus on higher-yield tenants,” say the analysts in a Jan 14 note. 

In addition, Ong and Tan see stable earnings visibility from the warehouse business for the next two years, given the contracts secured from key customers. “GKE has also completed a five-year lease renewal for its Pioneer Road warehouse, effective April 2021; we expect cost savings of $2 million annually from FY2022F onwards.”

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The company’s 1HFY2021 net profit rose by 260% y-o-y to $6.5 million, above expectations at 72% of CGS-CIMB’s full-year forecast. “The strong growth is attributable to: 1) optimal occupancy of its warehouses at higher rental rates in Singapore, 2) higher volume of ready-mixed concrete (RMC) sold at higher average selling prices in Wuzhou, China, and 3) payouts from government support schemes,” say Ong and Tan. 


See: GKE Corp more than triples its earnings to $6.5 mil in 1HFY2021 on improved income contribution


GKE is also expected to register strong earnings growth in its infrastructure materials segment in 1HFY2021 due to heightened construction activities in China, the analysts add. GKE has installed an additional line in its Wuzhou City RMC plant, raising its production capacity by 50% to cope with the increased demand for RMC. 

Ong and Tan also see new growth initiatives in Cenxi City, where GKE set up a construction waste material recycling plant (24% stake) and a RMC plant, both scheduled to commence operations in 1Q2021. 

“We expect the new growth initiatives to underpin earnings growth in FY2022F and forecast a net profit growth of 38% y-o-y to $13.5 million.

As at 1.53pm, shares in GKE Corp are trading 0.3 cents lower, or 2.17% down, at 13.5 cents.