PETALING JAYA: Tasco Bhd is a beneficiary of higher freight rates which should support its growth in the coming quarter.

       The company is also supported by demand from its diverse clientele base in several economic sectors, including the electrical and electronics segment.

       RHB Research said that Tasco’s ease of access to in-demand cargo spaces, especially with the supply chain disruption, to meet customers’ urgent shipping needs puts it on steady growth volume growth expectations.

       The company, which is rated a “buy” with a target price of RM1.90, also has the backing from NYK Line’s logistics network.

       “We expect Tasco to book a robust year-on-year growth in its upcoming fourth quarter for the financial year ended March 31, 2022 (FY22) results on the strong performance underpinned by buoyant volume throughputs and favourable freight rates.

       “We continue to like the firm for its undemanding valuation and positive earnings momentum despite Covid-19-related challenges,” RHB Research said.

       “This is alongside multiple growth avenues driven by capacity expansions, tax incentives, and forays into new markets, such as food retail, healthcare and eCommerce,” it said.

       Tasco is also expected to end its FY22 with record earnings, it said.

       It noted that the company’s underlying operations were buoyed by the strength of its contract logistics solutions.

       Additionally, the robust growth of ocean and air freight forwarding, which are leveraging on the elevated freight rates, is also a catalyst.

       It also noted that tax savings from its integrated logistics services scheme were also expected to kick in from this quarter onwards.

       With the impending broader economic reopening, RHB Research is expecting stable growth in volume throughputs to be a boon for Tasco’s integrated logistics solutions.

       “The company will also be a beneficiary of a pick-up in industrial activities and trade volumes.

       “Following the traction seen in 2021, the Statistics Department reported that export and import volume indices continued to see uptrends in January and February.

       “This is further complemented by the projected 5.3% to 6.3% gross domestic product or GDP growth for 2022.

       “This is driven in part by gross exports that are projected to grow by 10.9%,” the research house said.

       Commenting on the pegged target price, RHB Research said that this was now pegged to a 19 times target price-to-earnings ratio (PER) from 22 times on FY23’s forecast earnings per share which is plus-one standard deviation above its five-year mean.

       This also takes into account the rising yield environment and higher risk premiums which are related to external events.

       It noted that the company is trading at a 11.6 times forward PER, which is an undemanding multiple to its historical mean and regional logistics peers.