Analyst Note| Michael Field, CFA |
Narrow-moat DSV’s third-quarter report reads strongly, with gross profit up almost 20% year to date and EBIT up almost 60%, as the company takes full advantage of the disruption to shipping markets and resulting issues with tight capacity. Volume growth in airfreight picked up in the third quarter as yields continued to rise, while in seafreight the lack of available capacity drove gross profit per shipment to all-new highs. With management having recently upgraded the full-year outlook, after doing so a number of times since the beginning of the coronavirus pandemic, it is difficult to pinpoint when the tailwind of tight capacity will end, but we fully expect the current situation to persist into the first quarter of 2022 at least. Although we anticipate upgrading our forecasts on the back of recent news, and the GIL acquisition, we do not expect this to change our current view on the stock. With the share price hovering above DKK 1,500, we believe it is simply too rich.