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RHB Research sees Tasco on track for record year

KUALA LUMPUR (April 13): RHB Research expects Tasco Bhd to report solid year-over-year (year-on-year) growth in the upcoming results for the fourth quarter ended March 31, 2022 (4QFY22 ) thanks to solid performances supported by dynamic volume flows and advantageous freight rates.

Its analysts Lee Meng Horng and Raja Nur Aqilah Raja Ali said in a note Wednesday (April 13) that they expect Tasco to continue its strong growth momentum and end FY22 with record profits.

The underlying operations would be supported by the strength of its contract logistics solutions, as well as robust growth in sea and air transport, on strong freight rates, they said.

Additionally, they said tax savings from its integrated logistics services program are also expected to take effect starting this quarter.

Tasco’s results are expected to be released on April 28.

Meanwhile, with the broader economic reopening looming, both analysts expect steady volume throughput growth to be a boon for an integrated logistics solutions provider like Tasco.

Quoting Malaysia’s Department of Statistics, analysts said the export and import volume indices continued to follow upward trends in January (+7% and +18% yoy respectively) and February (+0 .3% and +10.1% year-on-year).

This would be further complemented by projected gross domestic product growth of 5.3% to 6.3% for 2022, driven in part by gross exports which are expected to grow by 10.9%, they added.

They also said tightness in the air and sea freight markets is expected to persist given port congestion, which bodes well for Tasco’s freight forwarding segment as freight rates remain high and are in decline. further supported by demand from a diversified customer base across various economic sectors, namely its significant exposure to the electrical and electronics segment and the securing of new contracts.

They believe Tasco’s ease of access to in-demand cargo space – in the face of supply chain disruption – to meet customers’ urgent shipping needs and NYK Line’s logistics network support have it set it on the path to steady volume growth.

The duo continue to like the company for its undemanding valuation and positive earnings momentum despite Covid-19 challenges.

This adds to multiple growth paths driven by capacity expansion, tax incentives and forays into new markets, such as food retail, healthcare and e-commerce. they stated.

However, they left their earnings estimates unchanged, maintaining their conservative stance.

Analysts maintained “buy” on Tasco but revised down their target price (TP) to RM1.90 from RM2.14.

TP is now pegged at 19x target price-earnings (P/E) versus 22x forecast earnings per share for FY23 after taking into account the rising yield environment and higher risk premiums high related to external events, they said.

At 11.6 times the forward P/E, they said the stock is trading at an undemanding multiple to its historical average and its regional third-party logistics peers.

As of this writing on Wednesday, Tasco was up two sen or 1.68% at RM1.21, valuing the group at RM952 million.

Over the past year, the counter has increased by 5.22%.