AllCargo Logistics is a global leader in the LCL business which has substantial Moats and can throw Free Cash flows for a long time. The company’s domestic business can provide the required trigger for valuation re-rating. I believe that AllCargo Logistics is a well run cyclical business that is available at attractive valuations.
Logistics industry has a high correlation with Economic activity and in certain of AllCargo’s business segments; the inherent operational leverage is too huge. AllCargo provides an interesting mix of business segments that allows us to play multiple Investment themes. AllCargo’s business been broadly classify into two segments as per their Investment characteristics:
International Business: (Less-than-Container Load (LCL,)Multi-Modal Transport operations (MTO), NVOCC)
a) Investment Characteristics – Secular Growth business, Asset Light business Model, Free Cash Flow generator, Durable and Expanding Moat, Lower Economic sensitivity, Lower Operational Leverage, moderate growth, Sizeable Opportunity and stable EBIDTA Margins.
b) Revenue Contribution = 80 to 85% of AllCargo’s total Business.
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