• A-Sonic Aerospace will acquire 60% of JGL Group for cash of S$15.216mn, of which S$6mn are new shares and S$9.2mn are vendor shares. JGL is a multi-modal freight forwarding across ocean, air and land. In addition, the company is involved in paper trading and is developing a depot for Isotank cleaning, repair, and maintenance in South Vietnam.
• The acquisition will increase FY25 A-Sonic revenue and PATMI by 28% and 36% respectively on a pro forma basis. It will similarly raise EPS a massive 36% to S$0.0511. JGL operates predominantly in SE Asia across six countries. Singapore is the largest, followed by Vietnam and Indonesia. The acquisition is valued at a 7.73x P/E Ratio excluding Isotank.
• The enlarged group is now operating in 16 countries and 34 cities. There are multiple drivers to growth post-acquisition – (i) The increase in operating scale and containers carried is an opportunity to extract significant cost synergies especially in sea freight cost; (ii) The ISO tank depot will be operational in FY27, contributing maiden earnings to the group; (iii) Lowering of agent commissions with the increased network of receiving agents; (iv) Increased working capital for JGL to drive revenue with customers. A-Sonic is still trading below its NTA of S$0.6245.

• A-Sonic is providing supply chain management services to global locations, including the US, Asia and Europe. The company specialises in a range of logistics solutions. It provides international and domestic multi-modal transportation, warehousing, distribution, customs clearance and airport ground services.
• PATMI has been stable the past five years despite continued disruption in global supply chains. 2H25 earnings grew 16.5% YoY to US$2.6mn from expanding margins from more customised projects and direct-to-customer solutions. The growth in semiconductor exports will be a key driver in FY26, driven by Malaysia and Singapore customers.
• With a net cash of US$46mn, the share price is trading at a 14% discount to net cash and 22% discount to book value. The company has been consistently buying back shares to close the discount to book value. There was 2.6mn shares purchased in FY25. The most aggressive on record. The highest price purchased was S$0.535. We believe the cash hoard provides the company with an avenue for inorganic growth.

Company Background

A-Sonic Aerospace Ltd was listed on the SGX Main Board in 2003 as a supplier of aircraft
systems and aerospace components. Today, the company is mainly engaged in logistics. It
operates in 28 cities in 14 countries, spanning four continents: Asia, North America, Europe,
and the Indian subcontinent. Margins are higher for end-to-end solutions due to additional
services provided, such as multi-modal, warehousing, trucking, and customs clearance.

Key Highlights
- Leading logistics group in Singapore. A-Sonic is one of the leading local companies
engaged in multi-modal logistics at the Changi Airfreight Free Trade Zone Terminal. A
Sonic delivers and picks up cargo for its air freight and sea freight customers, including
multinational corporations in various industries, e.g., semiconductors and healthcare.
It also collects goods from all over Singapore for export overseas. As Singapore is a
trade-focused country, it offers the advantage of a Free Trade Zone (FTZ) with trans
shipment facilities at the Changi Airfreight Centre and at Singapore ports. A-Sonic plays
a key role in ensuring that goods and products are transported on time and that the
required documentation is fulfilled.
- Asset-light model. The company essentially provides services to its customers and does
not carry inventory. It manages and coordinates the shipment of goods from point to
point for a fee. Goods can be transported via sea, air, truck or rail. The fixed assets are
largely trucks used to deliver goods within Singapore. Working capital requirements
have been minimal or negative over the past five years, with payables exceeding
receivables.
-Attractive valuations and net cash balance sheet. A-Sonic is trading at attractive
valuations. Listed logistics peers are trading at 23x PE on forward earnings, although
these companies are multinationals with global networks. The share price is presently
trading at a 14% discount to net cash and 22% discount to book value. The net cash has
been stable, averaging US$45mn per year over the past five years.
- Mergers and acquisitions are a potential source of growth. With a cash hoard of
US$46mn, we think the company can undertake earnings accretive tuck-in acquisitions.
Such acquisitions will boost A-Sonic’s scale and enable spinoffs. We expect the
geographic focus to be in SE Asia.

REVENUE
A-Sonic provides logistic solutions, including international and domestic multi-modal
transportation, warehousing, distribution, customs clearance and airport ground services.
Revenue comprises air and sea freight, transportation, customs clearance, documentation,
cartage, handling, transfers and delivery of goods. These services are recognised at a point in
time when control over the goods to be shipped is transferred to the customer, and the timing
of which is determined by the delivery and shipping contractual terms. The bulk of the revenue
comes from China, but at lower margins (Figure 1).

Almost 100% of revenue comes from the logistics segment, as A-Sonic has gradually reduced its
exposure to the aviation industry (i.e., the purchase and sale of aircraft systems and aerospace
components) over the years.

• A-Sonic provides logistic solutions, including international and domestic multi-modal transportation, warehousing distribution, customs clearance and airport ground services. China, including Hong Kong SAR, accounted for 74% of FY21 revenue.
• 2H21 PATMI jumped 127% YoY to US$3.4mn on the back of an 85% surge in revenue. Freight rates have surged due to the lack of supply. Customers are more price inelastic as availability and securing slots more critical.
• The share price is trading at a 24% discount to net cash and 31% discount to book value. FY21 dividend yield is 9.2%.

Company Background

A-Sonic Aerospace Ltd was listed on the Mainboard in 2003 as a supplier of aircraft systems and aerospace components. Today, the company is mainly engaged in logistics. It operates in 29 cities in 15 countries, spanning four continents in Asia, North America, the Indian sub-continent and Europe. Around 70-75% of the logistics business is wholesale and 25-30% retail. Margins are higher for retail due to additional service provided including warehousing, trucking, custom clearance, insurance, etc.

Key Highlights

1. Local player in air cargo terminal handling. A-Sonic takes care of air cargo unloaded in Singapore, before delivering to their customers which includes multi-national corporations in various industries, eg semiconductors, healthcare. It also collects goods from all over Singapore, to be exported overseas. As Singapore is a trade-focused country, it offers the advantage of having a Free Trade Zone (FTZ), which offers direct connections to the Changi Airfreight Centre. A-Sonic plays a key role in ensuring that goods and products are transported on time.
2. Asset-light model. In the coordination and shipment of goods from one place to another, A-Sonic offers solutions to integrate the end-to-end transportation process. This includes transporting the products from the manufacturer to the airport, before being shipped overseas, to reach the end-customer. Non-current assets consist of mostly motor vehicles and right-of-use assets, including lease of warehouses and office spaces.
3. Trading below cash. The balance sheet is very strong, with net cash of US$39.4mn. The share price is trading at a 24% discount to net cash and 31% discount to book value. Assuming all warrants are delisted, final number of shares listed would amount to 73,097,289 shares, and market capitalisation would increase to S$43.5mn, according to last closing price of S$0.595. This marks a 6% increase compared to the current market cap. Market cap would then be at a 19% discount to net cash, still very undervalued.
4. Logistics business thriving in China and Hong Kong SAR. 74% of FY21 revenue was derived from China and Hong Kong SAR. The 12-month moving average value of China’s airfreight volume has been averaging growth of 15% in 2H21, and has already surged past pre-pandemic levels. In 2021, total air cargo loaded and discharged in Hong Kong increased 12.8% YoY to 4.98bn tonnes. Compared with the pre-pandemic level in 2019, it was also up 6%. China’s airfreight volume in 2021 surged 16.2% to 27.8 ton-km mn.
5. Dividend yield of 9.2% in FY21. In FY21, the company declared a special dividend of 4.8 Scts/share, on top of an interim and final dividend of 0.5 Scts/share each. This implies a dividend yield of 9.2% and payout ratio of 37%. Since resuming profitability in FY18, dividend payout ratio and yield averaged 21% and 3.2% respectively. With strong cash generation and a robust balance sheet, consistency in dividend payments is expected.

REVENUE

A-Sonic Aerospace provides logistic solutions, including international and domestic multi-modal transportation, warehousing distribution, customs clearance and airport ground services.

Revenue comprises air and sea freight, transportation, custom clearance, documentation, cartage, handling and transfers and delivery of goods. These services are recognised at a point in time when control over the goods to be shipped is transferred to the customer and the timing of which is determined by the delivery and shipping contractual terms.

Almost 100% of the revenue is derived from the logistics segment (Figure 2).