Apex Securities has trimmed its earnings forecast for financial year 2025 (FY25) and FY26 to RM64.2mil and RM72.5mil, respectively.
PETALING JAYA: Logistics solutions provider Tasco Bhd
is expected to see stronger earnings in the coming quarters of its financial year ending March 31, 2025 (FY25), supported by strategic selling-price adjustments and improved margins, according to analysts.
RHB Research remained optimistic about Tasco’s prospects, projecting stronger earnings for both its air freight forwarding and ocean freight forwarding units in the coming quarters.
The optimism is driven by improved margins resulting from strategic adjustments in its selling prices.
Additionally, the research house expects freight rates to remain elevated during the peak season from September to November.
“We are upbeat on full contributions from the company’s two new warehouses, spanning 850,000sq ft, while it continues to benefit from its integrated logistics services tax incentive with an unclaimed tax credit exceeding RM32mil,” RHB Research said.
Despite a weaker performance in the first quarter ended June 30, 2024 (1Q25) within the freight forwarding business, primarily due to the AFF segment, RHB Research expects a better outlook as higher tender prices take effect from July onwards.
It said Tasco’s weaker performance within its air freight segment was mainly due to having to honour existing contract prices despite rising market costs.
However, the research house anticipates a better outlook for the segment on the back of better spreads as higher tender prices take effect from July onwards.
“We reiterate our ‘buy’ recommendation, supported by Tasco’s volume recovery in the coming quarters. We are upbeat on its future prospects, on the back of a favourable freight forwarding outlook, volume pick-ups, and contributions from new warehouses,” the research firm noted.
RHB Research also highlighted that Tasco’s ocean freight forwarding segment showed significant improvement, rising 34% year-on-year and 66% quarter-on-quarter.
Similarly, Apex Research projects a recovery in Tasco’s topline and margins in the upcoming quarters of FY25, attributed to the group’s price adjustments for freight forwarding services to tender commitment customers.
However, the research house expressed caution regarding the freight forwarding business margin due to the current volatility of international freight rates.
The anticipated strengthening of the ringgit against the US dollar could also pose challenges, potentially impacting bottom-line margins, it added.
“The domestic business is expected to remain flat over the foreseeable future, pending the completion of the new warehouse in 2026,” Apex Research said.
Despite these challenges, the research firm maintained a “buy” recommendation with an unchanged target price of RM1 per share, as the recent updates align with their expectations and forecasts.
Meanwhile, MIDF Research also maintained a positive outlook on Tasco, with a target price of RM1.20 per share.
The research firm expects freight rates to remain elevated due to a shortage of vessel space as the industry approaches the peak October to December period.
“We are optimistic that Tasco will refine its strategy for the freight forwarding business to balance tendered versus spot rate business as the latter offers higher margins. We also expect an uptick in volume as customers shift from ocean to air freight forwarding to expedite shipments due to port congestion,” it noted.
Apart from that, MIDF Research remained upbeat about Tasco’s warehousing business, as the newly added capacity will offer cross-selling opportunities for its other transport services once it reaches optimal utilisation.
Key risks for the company identified by MIDF Research include the potential loss of major customers, freight-rate fluctuations, and lower trade activity.
