Konoike Transport: Airport Services Remain A Driver Of Growth

2025-02-19 13:00:11 ET

Summary

• Konoike Transport's stock has a significant upside, but I recommend investing in the Japanese listing due to better liquidity and more accurate price reflection.
• The company is highly diversified, with exposure to various industries, including steel, food and beverage, airports, chemicals, and medical services.
• Recent earnings show strong growth, with third quarter sales up 9.3% and income up 35.3%, driven by airport-related services and international logistics.
• Analysts have increased EBITDA and free cash flow estimates, supporting a price target of $22.62, based on 11.3% annual EBITDA growth and 5.5% free cash flow growth.

In October 2024, I added Konoike Transport ( OTCPK:KNOIF ) to my coverage and rated the stock a buy . Since then, the OTC listing has gained 65%. However, since trading volumes are low, I believe that it's more meaningful to look at the stock price development of the listing in Japan . On the Japanese stock market, the price increased 19.5% and 20.5% in US dollars. The reason why the OTC listing gained 65% is that the listing was and still is trading significantly below the underlying value on the Japanese market. It shows that OTC markets can be tricky as lack of volume oftentimes may lead to the OTC price not reflecting the actual stock price development in the home market....

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