PDZ Holdings Bhd has won a RM600 million logistics contract with a top China-based e-commerce operator and it could trade limit-up this week.

Alibaba Group Holding Ltd and Tencent Holdings Ltd dominate the China e-commerce market with platforms such as Taobao and JD.com Inc but did PDZ sign with either one of them?

China’s e-commerce sector is one of the most mature yet innovative in the world. The sector has adapted very quickly to the outbreak of Covid-19 and it continues to expand.

We have seen longtime brick-and-mortar retail brands closing or going bankrupt that we never would have expected to see disappear ten years ago. For example, Toys”R”Us, after more than 60 years in business, they are liquidating and closing all of their remaining U.S. stores.

The way forward for businesses is e-commerce and PDZ is moving into the right direction to get a logistics contract with not just China’s top e-commerce operator whose business is booming but who may also be a world champion.

PDZ has been trading in the range of 3 to 4 sen since late 2018 started to rise in May this year from 4 sen on May 15 to close at 8.5 sen yesterday.

Some think the stock may trade limit-up this week upon hearing the news of the RM600 million deal. A limit up is the maximum amount that the price of a stock or commodity futures contract will be allowed to increase in a single trading session. Both a limit up and a limit down are used to prevent certain assets reaching excessively high volatility levels.

The new logistics contract will widen PDZ’s revenue and net profit in the coming quarters. PDZ posted higher revenue of RM1.22 million for the current quarter ended March 31, 2020, compared to the preceding year corresponding quarter of RM1.04 million, due to the higher volume transported by the firm between January and March.

It recorded a net profit for the three months under review, compared to the preceding year corresponding quarter mainly due to the higher revenue and lower administrative expenses.