PETALING JAYA: As the broader economic reopening continues, Tasco Bhd’s throughput volume growth looks promising complemented by its diverse clientele base.

       RHB Research said the logistics solution provider is expected to gain from additional boost from new business wins within the retail trading segment while benefitting from its existing customers.

       Tasco’s international business segment, meanwhile, will benefit from the extended tightness in air and ocean freight as well as elevated freight rates caused by the persistent supply chain disruption.

       Besides this, construction of a 650,000 sq ft warehouse under phase one of the Shah Alam Logistics Centre expansion will allow the group to capture warehouse shortage opportunities.

       The research firm said the stock’s “below-peer valuation presents an attractive proposition for investors” to capitalise on the logistics player with strong earnings delivery and robust growth momentum.

       Tasco booked a core profit of RM25mil in the fourth quarter ended March 31, 2022 (4Q22), bringing its financial year 2022 (FY22) core profit to RM77.4mil

       The results beat analysts’ expectations and came on the back of stronger performances from its international business.

       RHB Research noted that FY22’s pre-tax profit for air and ocean freight forwarding shot up 110.7% and 381.3% year-on-year (y-o-y) amid the pick-up in business activities.

       This was coupled with supply chain bottlenecks that saw clients resorting to air modes, as well as elevated freight rates.

       The domestic business also grew 25.7% y-o-y to close the year with a record – thanks to increased business volumes from both existing and newly secured customers. The research firm said it is raising its FY23-FY24 forecast earnings by 7% and 6.9%, respectively, taking into account higher contributions from the freight forwarding segment.

       “We subsequently raise our target price to RM2.03 (from RM1.90), it said.

       Meanwhile, MIDF Research said it has revised its FY23 and FY24 profit after tax upwards to RM75.8mil and RM78.6mil or by some 18%.

       “We maintain our “buy” call on Tasco with a revised target price of RM1.62 (from RM1.44) as we peg its revised FY23 earnings per share to an unchanged price earnings ratio of 18 times,” it added.

       Downside risks to MIDF’s call include lower-than-expected tax savings arising from the integrated logistics services scheme and and freight rates normalising sooner than expected.