Tasco Berhad has recently exhibited a promising outlook for Fiscal Year 2025 (FY25), with updates from both MIDF Amanah Investment Bank (MIDF) and RHB Investment Bank (RHB) providing a nuanced view of the company's prospects.

MIDF maintains a BUY recommendation on Tasco, with an unchanged target price of RM1.20. The investment bank highlights the stock's potential for a 33.3% price return, driven by expected recovery in shipment volumes and improved margins from increased warehouse utilisation. Tasco's first-quarter (1QFY25) core profit after tax and minority interests (PATAMI) of RM11.1 million met expectations, representing 17% of the full-year estimate.

The decline in revenue was attributed to downturns in the domestic business and trucking revenue, compounded by reduced deliveries and margin contraction in air freight forwarding. MIDF expects Tasco's performance to enhance as trade activities recover, new tenders in freight forwarding are secured, and the company benefits from increased warehouse utilisation and capital expenditure under the Investment Tax Allowance (ITA).

RHB Investment Bank maintains a BUY rating for Tasco, with a target price (TP) of MYR1.15, reflecting a potential upside of 28.1%. This valuation is underpinned by the anticipated favourable conditions in the freight forwarding market, volume recovery, and contributions from new warehouses. Although Tasco's 1QFY25 results fell short of expectations due to slower business from the contract logistics (CL) segment and adverse FX impacts, RHB remains optimistic about future quarters.

The 1QFY25 core net profit of MYR10.6 million, down 40.5% QoQ and 25.3% YoY, accounted for 15% of the full-year estimates. The decline was attributed mainly to weaker CL and air freight forwarding (AFF) segments, alongside a one-off non-cash PPE write-off of MYR3.6 million for the old head office building's demolition.

Despite a soft start to FY25, RHB expects stronger earnings in upcoming quarters, buoyed by improved spreads following revised selling prices and higher demand for urgent shipments. The addition of a major automotive customer to the CL segment and contributions from new warehouses are anticipated to bolster performance.

RHB has adjusted its FY25F-27F earnings estimates, cutting projections by 3-11% due to lower margins in the CL segment but maintaining the target price at MYR1.15, reflecting an unchanged 12x P/E ratio and a 2% ESG premium based on Tasco's 3.1 score.

The positive outlook from MIDF, supported by expected improvements in shipment volumes and warehouse utilisation, aligns with RHB's projection of future performance recovery despite current challenges. The integrated logistics player remains positioned for growth, with both analysts highlighting significant upside potential for investors.