Advice to put brake on firm

Research house Morningstar has advised Mainfreight investors to reduce their holdings, as the listed freight firm faces strong competition overseas.

Mainfreight's shares closed yesterday up 2 cents at $11.89, near year-highs. The price is past Morningstar's trigger point of $11.23 for reducing holdings.

Morningstar analyst Nachi Moghe said the firm was well run but the issue was now overvalued, compared with the headwinds it faced. "I feel the valuations are a bit rich, to be honest.

"We like the management [but the freight business] is cyclical in nature and they face quite a lot of competition, not so much from Australia and New Zealand but overseas.

"We don't think the company has great competitive advantages."

Mainfreight, which has 200 branches in the United States, Asia, New Zealand and Australia, has been attempting to gain a foothold in Europe, but the zone's soft economy has taken a toll on earnings.

In November, the trucking and logistics firm reported an interim net profit ended September of $27.7 million, 4.6 per cent easier on the same 2011 period. Turnover rose 4.9 per cent.

Its shares have risen off a low of $9.12 in May, as investors concentrate on the firm's strength domestically and in the US.Fairfax NZ

Taranaki Daily News