PETALING JAYA: Tiong Nam Logistics Holdings Bhd’s logistics and warehousing division is expected to help boost earnings for the group and cushion losses from the property and hotel segments.

       MIDF Research believes that the robust performance of the logistics segment would be sustainable, as Malaysia and regional economies are likely to stage a rebound.

       “We are cautiously optimistic on the group’s prospect in the financial year ending March 31, 2022 (FY22) and FY23 as the economy reopens.

       “In addition to sustainability of logistics, we posit that the performance of the property and hotel segments will also improve somewhat,” it said.

       Notably, the group’s revenue for the logistics and warehousing services segment increased 11.1% year-on-year in the second quarter ended Sept 30 (Q2 of FY22) to RM163.1mil as it secured new total logistics customers as well as due to business expansion from its existing customers.

       However, MIDF Research noted that the group’s property development segment saw revenue flat at RM0.4mil in Q2 as compared to RM0.7mil in the corresponding period a year ago.

       For Tiong Nam’s hotel and dormitory segment, revenue was also flat at RM1.8mil in Q2 of FY22 as compared to RM1.5mil in Q2 of FY21.

       It is important to note that Tiong Nam’s earnings in the first half ended Sept 30 rebounded to RM1.80mil from a net loss of RM1.83mil in the corresponding period a year ago.

       That said, MIDF Research noted that earnings came in below expectations, coming in at 11.5% and 10.6% of its and consensus’ full-year estimates, respectively.

       It is keeping a “neutral” call on Tiong Nam with an unchanged target price of RM0.85 per share despite rolling over its valuation to FY23.