Strong prospects from Tasco despite slight earnings miss
KUCHING: Prospects for logistic solution provider Tasco Bhd (Tasco) remain strong despite a slight earnings miss in the group’s financial year 2017 (FY17) results.
In a results review by the team over at MIDF Amanah Investment Bank Bhd (MIDF Research), it was reported that Tasco had recorded a core Profit after Tax and Minority Interest (PATAMI) of RM4.7 million which was a 71 per cent increase year over year (y-o-y).
According to the research arm, brought the group’s cumulative 12 months of FY17 (12MFY17) core Profit after Tax (PAT) to RM27.5 million – a 17 per cent increase y-o-y.
“This made up 88 per cent of your full year forecast, representing a variance of RM3.5 million.
“The shortfall was largely attributed to Tasco’s air freight business which incurred start-up costs in relations to a newly secured electrical and electronics (E&E) export contract that was secured through competitive bidding,” said the research arm.
Despite the variance of RM3.5 million, MIDF Research maintained that growth prospects for Tasco were strong due to growths in its international business and sturdy performance in its domestic business.
For Tasco’s international operations, both its air freight and sea freight divisions posted high double-digit topline growths of 25 per cent y-o-y in FY17, while its domestic business saw its revenue and profit before tax (PBT) growing by a moderate five and 13 per cent y-o-y, respectively.
Furthermore, the research arm opines that Tasco’s strong future prospects are further cemented by their recent move to enter the cold chain logistics business with two major acquisitions.
To recap, Tasco acquired two cold chain logistic assets earlier in the year in January, Gold Cold Transport Sdn Bhd for RM186 million and MILS Cold Chain Logistics Sdn Bhd for RM9.93 million which includes an outstanding loan balance of RM20 million.
“This would bode well for Tasco, as it is propelled from having nil cold chain assets to a market leader in the segment.
“Apart from that, a nascent recovery in international trade growth and an improving manufacturing sector would augur well for the company, in our view.”
That being said, MIDF Research is maintain its ‘buy’ call on the stock with a target price of RM2.91, derived from forward FY18 price to earnings ratio of 12.0 fold.