KUALA LUMPUR: RHB Research has kept its “Buy” call on Tasco Bhd and raised its target price to 66 sen from 61 sen, expecting stronger earnings in its second half despite a weaker-than-expected first quarter.
The research house said earnings should improve in the period ending March 31, 2027 (FY27), as the logistics company begins recognising contributions from two new warehouses and a regional semiconductor logistics hub.
Tasco’s core net profit fell 29 per cent year-on-year and 23 per cent quarter-on-quarter to RM7.2 million in the first quarter, representing 15 to 16 per cent of RHB Research’s and consensus full-year forecasts.
The weaker performance was mainly due to softer-than-expected contributions from its ocean freight forwarding, contract logistics and cold supply chain businesses.
After adjusting for a RM1.3 million foreign exchange impact and gains from the disposal of fixed assets, revenue rose 10.2 per cent year-on-year and 6.5 per cent quarter-on-quarter to RM245.2 million, supported by stronger air freight forwarding volumes.
RHB Research said higher global ocean freight rates amid the Middle East conflict prompted customers to shift shipments to air freight, lifting volumes in the company’s air freight forwarding business.
However, weaker ocean freight volumes weighed on its contract logistics segment, particularly customs clearance activities linked to project shipments.
“The softer contract logistics performance was partly offset by improved warehouse contributions, supported by higher storage utilisation and new warehousing contracts from retail customers,” it said in a note.
The cold supply chain business also underperformed due to customer attrition.
RHB Research expects earnings to strengthen in the second half of FY27, driven by the newly completed 400,000 sq ft expansion at the Shah Alam Logistics Centre and a 300,000 sq ft warehouse at Northport, both completed in mid-2026.
A regional semiconductor logistics hub in Penang, which is expected to begin operations in July 2026, should provide an additional earnings boost.
RHB Research kept its earnings forecasts unchanged pending the company’s upcoming analyst briefing.
The target price of 66 sen is based on an unchanged valuation of 12 times FY27 forecast earnings and includes a two per cent environmental, social and governance premium.
It said the stock remains attractive, trading at about six times its projected FY27 price-to-earnings ratio, below its five-year average of around 10 times.
Key risks include the loss of major customers, weaker operating margins, lower freight rates and a broader economic slowdown.