Tasco’s diversity provides strong growth prospects
PETALING JAYA: Integrated logistics player Tasco Bhd remains attractive for its diversified business segments, giving it solid cash flow generation and strong growth prospects and healthy dividend yields.

“We reiterate our conviction on Tasco, supported by signs of recovery for the fourth quarter of its financial year ended Mar 31, 2024 (4Q24).

“We believe the group’s future prospects will be supported by contributions from new higher-margin warehouses, further tax credit savings and additional pick-ups in trade activity within the intra-Asia region,” RHB Research said.

It maintained a “buy” recommendation on the company with a target price of RM1.15, pegged to an unchanged 12 times FY25 price-earnings multiple.

“We came away from Tasco’s post-results briefing and site visits remaining upbeat on FY25 and beyond. This is driven by recovery in trade activity, regional business projects, contributions from new warehouses and a lower effective tax rate,” the research house added.

It said Tasco saw a mixed performance in its freight forwarding business.

The air freight forwarding segment remained profitable, posting a pre-tax profit of RM3.4mil despite elevated rates, while revenue was 20% lower year-on-year at RM63mil, mainly due to softer volumes, especially from the electrical and electronics and semiconductor sectors.

Meanwhile, the ocean freight forwarding unit recorded a pre-tax profit of RM3.4mil in 4Q24, which was a 80% decline year-on-year (y-o-y) on the back of a 44% y-o-y jump in revenue to RM31.6mil, boosted by higher shipments, which compensated lower ocean-freight rates.

The contract logistics segment’s FY24 pre-tax profit contracted 30% y-o-y to RM33.3mil as a consequence of weaker consumer demand.

The cold-chain wing also experienced declines in business activity due to the ongoing boycott situation in the consumer sector.

However, its Westport Logistics Centre (WPLC) Block B is now fully occupied by a manufacturing customer, with full contributions to kick in from 1Q25 onwards.

According to Apex Securities Research, the WPLC Block B space has been leased to a Japan-based electronic music instruments customer.

The research house kept its earnings forecasts for Tasco at RM81.7mil and RM105.1mil for FY25 and FY26, respectively, reiterating a “buy” recommendation with unchanged target price of RM1.12.

In 4Q24, warehousing operations reported lower margins and bottom line, attributed to the transitional phase of relocating customer cargo into the new warehouse.

The research house, however, expected the warehouse business to improve over the foreseeable future as operations stabilise, backed by warehouse expansion that is expected to create synergies and business opportunities across other segments.

“Furthermore, Tasco is exploring opportunities within specialist-storage warehouses, such as cold storage for semiconductors and dangerous-goods warehouses.

“Looking ahead, the group intends to leverage its existing land to further expand warehouse capacity,” Apex Securities Research added.

The research house kept its earnings forecasts for Tasco at RM81.7mil and RM105.1mil for FY25 and FY26, respectively, reiterating a “buy” recommendation with unchanged target price of RM1.12.
Corporate News,Tasco,logistics,diversifiedbusiness,cashflow,growthprospects,dividendyield,warehouseexpansion,regionaltrade
Integrated logistics player Tasco Bhd remains attractive for its diversified business segments, giving it solid cash flow generation and strong growth prospects and healthy dividend yields.