RHBInvest maintains ‘buy’ stance on Tasco with RM2.50 target price

KUALA LUMPUR: The recent share price weakness presents a good opportunity for investors to position into logistics service provider Tasco Bhd, said RHB Investment Bank Bhd (RHBInvest).

Given Tasco’s multi-year expansion plans and strong underlying business fundamentals, it was well-positioned to capture the industry’s structural growth opportunities, said RHBInvest in a note yesterday.

“Further upside could stem from potential ventures into e-commerce, trading and the Covid-19 vaccine rollout.

“The broad-based cyclical recovery theme bodes well for the logistics sector’s throughput on improving industrial production and trade activities, supported by vaccine deployment.”

Overall, RHBInvest expects the logistics segment to remain resilient and grow year-on-year on a snapback in broad industrial activities.

It said the freight-forwarding segment should continue to enjoy healthy margins from prolonged supply constraints and higher rates.

These, alongside forthcoming tax reductions, were expected to sustain earnings growth over financial years ending March 31, 2022 and 2023, it added.

“Notwithstanding the initial Pfizer-BioNTech vaccine batches (one per cent of 32 million doses ordered) seemingly handled by its global logistics partner, we believe there are plenty of opportunities for other players for subsequent batches and other Covid19 vaccines, especially if temperature-controlled warehousing/trucking and last-mile delivery are required.

“We have yet to factor in the contribution from vaccine-related income in our forecasts, implying further target price upside if Tasco enters into any vaccine logistics arrangements,” it noted.

RHBInvest reiterated its “buy” call on Tasco and maintained its target price at RM1.25 per share (post-share split).