The Company
Established in 2004, Doha-based Gulf Warehousing Company (GWC), which trades as GWCS on the Qatar Exchange, provides a host of services such as warehousing, freight forwarding, transport, international relocation, records management and supply-chain consulting solutions to various industries. In 2011, the company acquired a 100% stake in Agility Qatar. Following the acquisition, Agility Qatar had an 18.1% stake in GWC, while a Qatari institution holds 18.8%; this leaves 63.2% for the public. The growth driver for the firm comes from Logistics Village Qatar (LVQ), an integrated 1m-sq-metre logistics facility. Besides LVQ, the company has five major warehouses located in key industrial areas, of which two provide frozen storage facilities. GWC operates a fleet of more than 400 trucks and over 700 trailers, and offers freight forwarding services and transportation services to clients. Being the dominant player in the Qatari logistics market, we believe GWC represents a highly compelling long-term growth opportunity. The company is in the enviable position of being able to drive expansion across all of its segments. We expect the combination of LVQ, along with traditional revenue drivers, will drive top-line and bottom-line growth. The company is in the final stages of closing down its 51%-owned subsidiary, Imdad (a company involved in trading foodstuffs and other consumables), and will focus on logistics-related business. LVQ is the growth driver in the near term, and is located within 15 km of the seaport, 18 km from the airport and just 2 km from Qatar’s main industrial area. This strategic location, coupled with the host of facilities being offered to clients, has resulted in LVQ operating close to its full capacity. LVQ is technically a property rental business, wherein GWC will lease out space to clients for five to 10 years. Phases 1, 2 and 3 are operational, and phase 4 will be coming on-line in mid-2014. The LVQ business is also expected to have a positive impact on the existing logistics and freight forwarding operations of the company.
Technology plays an important role in the logistics industry, and GWC is bringing innovation and convenience to the Qatari logistics market. The group offers third-party logistics as well as fourth-party logistics services, with high-quality warehousing facilities and increased client focus. Its warehouses are built to the latest specifications in the international logistics industry and offer temperature-controlled storage, ambient and bulk storage, labelling and tagging, palletising and other value-added services. The management software systems allow intermediaries to automate many of the steps involved in finding capacity, tendering loads, updating delivery status and other transactions. In our view, the 2011 acquisition of Agility Qatar has allowed GWC to benefit from Agility’s knowledge of the international logistics market.
Financial Forecasts
As of December 2013, we expect GWC to post top-line and bottom-line compound annual growth rates of 15% and 28%, respectively (2012-15). In the first nine months of 2013, the firm has already posted a bottom line of QR75m ($20.5m), and we expect the firm to close the year at QR105m ($29m). Going forward, we expect net income to increase to QR126m ($35m) and QR178m ($49m) in 2014 and 2015, respectively.
Risks
Risks include low occupancy in phase 4 of LVQ, in addition to GWC catering to the Qatari market, which leads to concentration risk. Further, any downturn in the domestic economy can negatively impact the company.
Development Strategy
GWC is also exploring options outside of Qatar, opening an office in the UAE, and the firm is active in the freight-forwarding business. GWC is also looking at opportunities in Saudi Arabia and Africa. While these plans are still at a very nascent stage, GWC is likely to leverage its existing relationships to penetrate foreign markets.
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