PETALING JAYA: Tasco Bhd’s net gearing is expected to increase from land acquisition in Port Klang, according to MIDF Research.
Overall, the research house said it is positive on the proposed acquisition due to the strategic location, which is close to the logistics centre, and the expansion of Tasco’s capacity for its cold supply chain business.
Tasco’s net gearing will increase to 0.52x from 0.45x as at Dec 31, 2018, which is manageable for the company.The research house pointed out that the expected gearing level has included the effects of 30% divestment of Tasco’s cold supply chain business to Japan Overseas Infrastructure Investment Corp for Transport and Urban Development.
“We opine that the proposed acquisition will not have any material impact on Tasco’s day-to-day operations and financial health as the company generated a net operating cash flow of RM26.1mil on average in each of the past three quarters,” MIDF said in a report yesterday.
Last week, Tasco had proposed an acquisition of 16.3 acres leasehold land in Port Klang for RM25.8mil.
The acquisition includes a cold supply chain facility, factories and a warehouse.
The acquisition is expected to be completed in the second half of the year and will increase Tasco’s land in Port Klang from 39 acres to 55 acres.
The parcels of land are located within an established industrial neighbourhood of North Port, Kawasan Perusahaan Selat Klang Utara and Perdana Industrial Park.
MIDF said it is positive on the acquisition due to the strategic location of the land and the expansion of Tasco’s cold supply chain capacity of approximately 37,000 pallets with an average utilisation rate of above 80% via the acquisition of spaces from existing cold supply chain companies.
Tasco shares closed one sen lower to RM1.39 in line with the overall weakness of the broader market.
MIDF has maintained its earnings forecast on Tasco for FY19 and FY20 as it reckoned the impact of the increase in financing cost will take effect in FY21.