PETALING JAYA: Tasco Bhd is expected to continue with its growth momentum, supported by a strong throughput as the economy gradually reopens with contributions coming from new projects.

       Analysts are maintaining a “buy” call on Tasco, given its latest second quarter of financial year (FY) 2022 earnings, which beat expectations on record-high revenue as well as its strong international freight forwarding (IFF) segment.

       RHB Research has also revised a new target price for Tasco to RM1.94 from RM1.79 previously.

       “The stock is trading at an undemanding below peer valuation, which presents a good entry point into a renowned third party logistics player with a strong international presence and multiple growth avenues,” said the research house in its latest report.

       It also believed that Tasco would continue to scale new heights in the subsequent quarters amid the pent-up demand post-reopening, and as the economy gradually returns to normalcy, which bodes well for the logistics sector.

       Given the array of facilities and certifications such as good distribution practice, authorised economic operator, RHB Research noted that Tasco is well-placed to capture near-term growth, boosted by major contract wins and e-commerce portfolio expansion.

       The group also planned to grow its retail trading and healthcare portfolio, while aiming to become a regional e-commerce hub and transhipment centre.

       “We raise the earnings forecasts for FY22 to FY24 by 8.2% to 6.5% after factoring in higher contribution from the IFF segment.”

       Furthermore, RHB Research is maintaining a “buy” call on Tasco’s positive earnings momentum and multiple re-rating catalysts.

       “The group’s five-year capital expenditure cycle should begin in H2FY22, and we can expect the low effective tax rate to lift earnings growth.

       “We also do not rule out the possibility of Tasco being classified as syariah-compliant in November,” added RHB Research.

       Meanwhile, MIDF Research said Tasco is going strong given its H1FY22 core earnings of RM32.3mil that came in largely within its expectation, but above consensus at 55% and 57% of full-year estimates respectively.

       “We maintain our earnings estimates as Tasco’s results were within our earnings expectation,” it said in its report.

       MIDF Research, which has a “buy” call on Tasco, has also revised the stock’s target price to RM1.65 from RM1.47 earlier as “we rollover our valuation to FY23.”

       The research house added that the new target price was derived by pegging its FY23 earnings per share to a revised price-earnings ratio of 22 times from 20 times previously, which is a two-year historical average.

       However, the key downside risks to its call included lower-than-expected tax savings from the Malaysia Industrial Development Authority’s incentives, and bigger-than-expected drop in air freight forwarding rates as the capacity for long haul belly cargo space returns to pre-pandemic level.