Company Interview / This logistics stock might be a logical 'buy'

Key points:

ASX 200 viewed as trading near historical valuation highs Qube Holdings (ASX:QUB) seen as undervalued due to misunderstood Patrick’s stake Current reporting season expected to have heightened volatility Earnings downgrades likely to lead to significant share price falls, while upgrades could see moderate rallies

Australia’s ASX 200 is currently trading at levels not seen since its 2021 valuation highs, says Jason Teh from Vertium Asset Management, who notes that market multiples are at a near-record. Teh sees the index as “quite expensive” over the 20-year historical average, yet acknowledges there are still pockets of value to be found. One such opportunity is Qube Holdings (ASX:QUB), now a mid-cap heavyweight. Teh points out that the market struggles to correctly value Qube’s 50% stake in Patrick’s, which is not reflected in Qube’s reported EBITDA figures. With Patrick’s holding recently valued at 16.6 times EBITDA, while Qube trades at a 14 times multiple, Teh suggests the market may be undervaluing Qube’s total business.

Teh argues Qube is trading around 20% lower than prior to the acquisition, at levels last seen in 2015-2016. He believes this presents a historically cheap entry point into the company.

Turning to the current reporting season, Teh highlights the volatility among ASX names, mentioning Credit Corp (ASX:CCP) and ResMed (ASX:RMD) for their strong performances. He expects similar market behaviour as seen in the US, where earnings downgrades are heavily punished and upgrades spark rallies, signalling an asymmetric payoff for investors this season.