Cogent Holding Limited – Three Things That Investors Should Know About This Company That Outperforms The Market

Cogent Holdings Limited (SGX: KJ9) is a company that is involved in many aspects of logistics. They include transportation, warehousing, container-depot management, automotive logistics and project cargo.

Apart from its logistics business it also has a property management arm which manages “The Grandstand”, formerly known as Turf City.

Recently, this company captured my attention due to its market beating performance in the last five years, up by around 500%.

The strong market return has prompted me to look a little deeper into the company. I found three interesting things.

Five-year growth rate:

In the last five years, revenue grew from S$65.1 million to S$129.2 million, which translates into a compound growth of 18.7%. At the same time, net profit grew even faster – it rose from S$3.3 million to S$25.5 million, which translates into a compound growth of 66.7%.

As a result of the growth, the earnings per share has expanded by 465% or 54.2% compounded per year during the period.

Return on Equity:

The Return on Equity (ROE) is used to measure how well a company is generating profit using its shareholders capital.

The median trailing return on equity for the 30 companies that make up the Straits Times Index is around 8.8%, according to data from S&P Global Market Intelligence.

Cogent Holding’s, ROE for 2015 stood at 25.4% (according to the 2015 annual report).

Owner management:

Owner management is used to describe the significant shareholders that also happen to be the management of the company. As such, this type of shareholder/management structure allows the management to have significant control over the long term direction of the company.

In the case on Cogent, the chairman Mr Tan Yeow Khoon and managing director Tan Yeow Lam own a combined stake of 83.85% in the company through direct and indirect holdings (2015 annual report)

Though it is difficult to judge whether the management’s interest is aligned with the minority shareholders, investors have benefitted so far. In the last five years, the share price of Cogent is up by more than 500%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.