Tasco gains steady upward momentum despite poorer 4Q numbers

Tasco Bhd has been on a slow and steady climb in terms of share price since hitting a year low of 76 sen last year. The counter has started its upward momentum since the beginning of the year & it touched a 52-week high of RM1.02 last month

Tasco is currently trading at an undemanding valuation, at 9.7x FY25 earnings per share. The total logistics solutions provider has a fundamental target price of RM1.20 or FY25 price earnings ratio of 13.0x.

The company operates through five divisions namely Air freight forwarding division, Contract logistics division, Ocean freight forwarding division, Trucking division and Origin cargo order and vendor management division.

It renders warehousing services, such as public bonded warehouse and cold room facilities. Additionally, the company and its subsidiaries are also involved in the business of truck rental, in-house truck repair and maintenance, insurance agency services and warehouse rental as well as the services related to freight forwarding.

But Tasco was affected by lower businesses from its air freight forwarding and ocean freight forwarding divisions, as freight rates fell to pre-pandemic levels.

Its net profit for FY2024 dropped 32% to RM61.74 million from RM90.8 million, as revenue fell 33.2% to RM1.07 billion from RM1.61 billion. Its net profit for 4QFY2024 fell 18% year-on-year, to RM17.86 million, down from RM21.8 million a year earlier.

For full year, net profit dropped 32% to RM61.74 million from RM90.8 million, as revenue fell 33.2%. Its freight forwarding division's profit before tax (PBT) fell 78.1% to RM9.02 million in FY2024 from RM41.27 million in FY2023. Meanwhile, Tasco’s ocean freight forwarding division's pretax profits plunged 92.4% to RM1.19 million from RM15.64 million.

Its contract logistics division also saw a 30.2% decline in PBT to RM33.24 million from RM47.6 million. The declines were partly mitigated by its cold supply chain division's PBT, which jumped 91% to RM14.11 million from RM7.39 million.

Tasco said the economic environment had largely normalised in FY2024, compared to when the pandemic disrupted supply chains in 2020 to 2022 and resulted in soaring international freight rates for both ocean and air, which the group had benefited from.

The upturn is hinged on the positive outlook for Tasco in FY25, as the company will benefit from a recovery in shipment volume across all divisions as trade activities recovers.

The International Air Transport Association (IATA) predicts a 4.5% growth in airfreight volume this year. This could translate into the recovery of Tasco’s air freight forwarding division.

Furthermore, as customers gradually move into Tasco’s two new warehouses, it could experience improved performance in the contract logistics division.

Investors should be encouraged by the company’s ability to recover and ride on the uptick in freight business and may want to take their position now.