Tasco’s 3QFY24 earnings of RM14.7 million miss the mark
The decline in freight forwarding volume was likely the main factor behind the revenue contraction in contract logistics, notably with the customs clearance business recording a -46.9 per cent y-o-y decline.
MIDF Research
KUCHING: Tasco Bhd’s third quarter of financial year 2024 (4QFY24) core earnings of RM14.7 million has missed expectations as it brought its first nine months of financial year 2024 (9MFY24) earnings to RM42.1 million accounting for only 50 per cent of consensus full-year estimates.
In a results review report, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) highlighted that the transportation and logistics group’s 9MFY23 earnings had only met 56 per cent of their full-year forecasts mainly due to weaker-than-expected contributions from its ocean freight forward and contract logistics segment.
For 3QFY24, the group’s core earnings saw a 40.4 per cent year on year (y-o-y) dive due to a drop in market freight rates and shipment reductions which especially impacted its ocean freight forwarding division.
“The decline in freight forwarding volume was likely the main factor behind the revenue contraction in contract logistics, notably with the customs clearance business recording a -46.9 per cent y-o-y decline,” said the research arm.
On a more positive note, the group’s core earnings saw a modest sequential increase of 3.0 per cent quarter on quarter (q-o-q) as its air freight forward division saw optimistic growth due to increased shipments from its aerospace, electrical and electronic (E&E), capacitor and fast moving consumer goods (FMCG) customers.
Looking ahead in 2024, MIDF Research highlighted that ocean freights rates are on the rise due to the Red Sea geopolitical crisis where several commercial ships have been targeted by Houthis.
While this is expected to benefit logistic players like Tasco, the research arm cautioned that the immediate impact would remain limited as shipment volumes have not substantially picked up.
“Nonetheless, we maintain our expectation of an increase in handling volume, anticipating a gradual recovery of trade activities throughout the year.”
“We also expect improved performance in the contract logistics division from 4QFY24 onwards, driven by the inaugural contributions from the two new warehouses, West Port Logistics Centre and Shah Alam Logistics Centre, which are expected to yield better rates,” MIDF Research added.