Analysts upbeat on Tiong Nam’s long-term potential
KUCHING: Analysts remain upbeat on the long-term potential of Tiong Nam Logistics Holdings Bhd (Tiong Nam) and the nationwide vaccine drive lent a continued optimism to the group’s operational outlook.
In a briefing note on Tiong Nam, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) opined that it is cautiously optimistic on the group’s prospect beyond 2021.
“The nationwide vaccine immunisation drive that have started at the end of February 2021, lent a continued optimism to Tiong Nam’s operational outlook,” MIDF Research said.
“We remain upbeat on the longterm potential of Tiong Nam as it is one of the biggest logistic players in Malaysia with notable regional presence in comparison to its peers.” Moving forward, with Malaysia and regional economies are expected to stage a rebound, MIDF Research opined that the robust performance of the logistics segment will be sustainable.
To note, the research arm’s house forecast the Malaysian gross domestic product (GDP) to grow at 5.4 per cent in current year 2021 (CY21).
“In addition to sustainability of logistics, we posit that the poor performances of the property and hotel segments will not be repeated beyond financial year 2021 (FY21).
“Low base effect will kick in starting in FY22 for property and hotel segment as it saw a near wipe-out for its top line in FY21 at 96 per cent year on year (y-o-y) and 64 per cent y-o-y. We project that these two segments are able to at least reach up to 40 per cent of its pre-pandemic top line level with financial performances slated to rebound in 2HFY22.” Overall, MIDF Research opined that the logistic and warehousing segment of Tiong Nam will not only cushion the losses from the property and hotel segments but also, assist in boosting earnings going forward.
“This will turn the tide for the group financial performances in the future as Tiong Nam graduated from a string of financial losses to projecting earnings growth.
“This is a boon to its shareholders. Hence, we maintain our call to ‘buy’.”
However, the research arm cautioned investors from exercising excessive optimism despite the positive outlook for the group as operationally it is still pandemic-laden and the company still has two loss making divisions.
“A rerating catalyst would be a bigger-than-expected loss from Covid-19 and the pickup in Johor’s property market.”