Tasco shareholders approve venture into cold chain business

SHAH ALAM: Logistics player Tasco Bhd expects its maiden foray into the cold chain business to contribute about 15% to 20% to revenue for the financial year ending March 31, 2018 (FY18), after both proposals of its EGM received near unanimous approvals from shareholders.

With shareholders giving the green light to acquire Gold Cold Transport Sdn Bhd (GCT) and MILS Cold Chain Logistics Sdn Bhd, the company will now enter the domestic cold chain business.

The logistics firm will be acquiring all of GCT’s ordinary shares from Chang Kok Fai and Chan Sun Cheong for a total value of RM185.62mil. The other proposal was related to the acquisition of six parcels of leasehold land in Pulau Indah for RM113.83mil and the takeover of MILS Cold Chain Logistics for RM9.93mil from Swift Integrated Logistics Sdn Bhd.

Tasco executive chairman Lee Check Poh, who spoke to reporters after the EGM, projects the company to generate some RM110mil in revenue contribution from the cold chain segment in the current financial year.

“The expected RM110mil revenue contribution represents about 15%-20% of our overall top line based on our revenue last year.

“We consider this to be a conservative projection, as we did not include the value that could be generated via the synergy created between the new cold chain segment and our other existing business segments.

“We believe that the acquisitions that have been approved by our shareholders would position us as one of the best end-to-end logistics solutions providers,” he said, adding that Tasco would still be on the lookout for viable opportunities to further expand operations.

The acquisition of GCT will be completed by the middle of July, while the acquisition from Swift Integrated Logistics will be done by the end of November.

With regard to Tasco’s outlook moving forward, the company’s managing director Freddie Lim Jew Kiat said the company is projecting a double-digit growth for its sales target this year.

“If everything goes well without much external effects, we expect a better sales growth this year compared to what we had seen a year earlier.

“We hope to see a double-digit sales growth this year and are taking necessary measures to achieve the target,” added Lim.

The Main Market-listed logistics player recorded marginally higher earnings for FY17, as net profit was up by 0.2% year-onyear (y-o-y) to RM30.67mil.

However, overall revenue showed a significant improvement as it increased by 13.3% y-o-y to RM584.4mil, primarily attributed to its international business solutions (IBS) segment posting a significant increase in revenue.

Segmental-wise, the domestic business solutions division comprising the contract logistics and trucking divisions, contributes about 55.1% to Tasco’s top line. The IBS segment contributes the rest of the company’s revenue.