TASCO’s 9MCY13 was in line with our expectations. Recovery is seen in its 3Q numbers, but a weak 1H has dragged on its YTD performance. Most of its business divisions reported earnings growth in 3Q, except for the trucking division. Thus, we are keeping our earnings forecast unchanged at this juncture and retain our BUY recommendation and MYR2.30 FV on this stock.
- 3QCY13 improved as expected. TASCO reported a healthy set of results in 3QCY13 after struggling for two consecutive quarters. Revenue grew 13.2% q-o-q to MYR118.1m from MYR104.3m, while net profit improved 20.8% q-o-q to MYR6.9m from MYR5.7m. Nonetheless, due to a weak start for its 1H, TASCO’s 9MCY13 cumulative earnings were 19.1% lower y-o-y. Having said that, its 9MCY13 earnings were in line with our expectations, as we had earlier incorporated lower net profits in tandem with the challenging business environment .
- Operations overview. In 3QCY13, TASCO’s business divisions generally reported improvements in revenue and earnings, particularly its contract logistics division, which reported revenue and pre-tax profit growth of 30% and 68% q-o-q respectively. This was attributed to an increase in the customs clearance, haulage and warehouse business. However, this was offset by its trucking division, which recorded a revenue drop of MYR0.9m (-4.4% q-o-q) and pre-tax loss of 0.7m on higher fuel costs and minimum wage.
- Risks. Prolonged sluggishness in the economy and weak exports could further dampen TASCO’s performance. The group also has greater exposure to the export market, where a sustainable recovery has yet to be seen. All these can be a potential risk to our earnings forecast.
- Maintain BUY, FV MYR2.30. We are positive that TASCO is able to meet our CY13 full-year earnings forecast and we also believe that the macroeconomic outlook may turn brighter in 2014. Hence, we are keeping our earnings forecasts unchanged at this juncture and maintain our BUY call on TASCO, with its MYR2.30 FV – pegged to 8x CY14F P/E, which is its historical P/E – retained.



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Tasco Malaysia (TASCO) is a leading third-party logistics provider.
Tasco Malaysia (TASCO) is a leading third-party logistics provider.
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