KUALA LUMPUR: Tasco Bhd is poised to benefit from the strong export performance of Malaysia, paving the way for sustained stellar earnings for the rest of the financial year ending March 31, 2022 (FY22).
Malaysia recorded a 32.1% year-on-year (y-o-y) growth in exports for the first half (H1) of 2021.
As economies reopen, JF Apex Securities Bhd is expecting full-year exports to rise 56.8% y-o-y, underpinned by robust external demand especially for rubber and electrical and electronics (E&E) products.
This certainly bodes well for Tasco’s international business solutions (IBS) segment.
The logistics group is already seeing positive traction in its earnings.
For the first quarter ended June 30, it posted net profit of RM15.77mil compared to RM2.64mil a year ago, while revenue rose 62.4% to RM290.05mil.
JF Apex said the group’s earnings came in higher than estimates, accounting for 38% and 30% of its and consensus full-year forecasts respectively.
“Tasco’s ocean freight forwarding (OFF) division has recorded RM2.3mil in the current quarter, which soared 592.1% y-o-y and 19.1% quarter-on-quarter (q-o-q) spurred by increasing sea freight rate which was driven by demand and supply of vessel space and containers.
“We expect the freight rates will remain high this year as demand continues to outstrip capacity and benefit the group,” the brokerage said in a recent report.
JF Apex is cautiously optimistic of Tasco’s FY22 performance with the rebound of economic activity as well as the accelerated rollout of vaccination programmes worldwide and in Malaysia.
Consequently, it increased its FY22 and FY23 net profit forecasts to RM53.3mil and RM54.3mil from RM41.1mil and RM42.9mil respectively.
RHB Research, on the other hand, opted to keep its existing forecasts despite anticipating a stronger H2 due to the fluid pandemic situation and timeline for the full re-opening of the economy.
It noted that the company’s Q1 results were largely within its expectations even though it was slightly impacted by June’s movement restrictions, which also resulted in reduced operating hours for logistics companies.
The steady performance was supported by Tasco’s diverse clientele base, across various economic sectors, in addition to increased contribution from newly secured customers.
As such, earnings only dipped marginally (-3.5% q-o-q) from Q4FY21’s record-high quarter, in line with its resilient revenue (-2% q-o-q), it said. “The latest results’ positive read-throughs bode well for Tasco’s performance over subsequent quarters as well, underpinned by the latest movement restrictions’ lessened impact versus last year’s lockdown – in part due to its exposure to the electrical and electronics and other export-oriented industries, which were classified as essential this time, alongside continued traction with new business wins,” RHB said.It added that tax savings from its Integrated Logistics Services scheme are also expected to kick in in the subsequent quarters.
RHB, which has a “buy” call on the stock with a target price of RM1.75, noted that key downside risks to its recommendation include weaker-than-expected recovery in freight volumes and higher-than-expected operating expenses.MIDF Research, which likewise has a “buy” call on Tasco, believes the group will be able to maintain its stellar performance ahead.
The research house expects Tasco to see improved earnings on the back of a growing top line for its IBS segment, brisk recovery on its domestic business solutions segment and margin expansion via the Investment Tax Allowance scheme from MIDA.
MIDF revised its target price on Tasco to RM1.47 from RM1.38 previously as a result of a revision in its earnings forecast.