RHB Research made a “Buy” recommendation for Tasco Bhd with a target price of RM1.94. Its TASCO’s 2QFY22 (Mar) earnings beat expectations on record-high revenue and its strong international freight forwarding (IFF) segment.
It said that it raised FY22-24F earnings by 8.2-6.5% after factoring in higher contribution from the IFF segment, while also considering the higher tax rate this quarter. “Consequently, our TP is increased to MYR1.94 on an unchanged 22x 2022F P/E (+0.5SD above its 5-year mean), and unchanged 2% ESG premium, in line with our in-house ESG scoring methodology,” it says.
The research house says that it is a “BUY for Tasco as its positive earnings momentum and multiple re-rating catalysts. Its 5-year capex cycle should begin in 2HFY22, and we can expect the low effective tax rate to boost NPM and lift earnings growth. “We also do not rule out the possibility of TASCO being classified as shariah-compliant in November,” it says
RHB says that it expects TASCO to continue its growth momentum, supported by stronger throughput – as the economy gradually reopens – and contribution from new projects.
It says that the stock is trading at an undemanding below-peer valuation, presenting a good entry point into a renowned third-party logistics (3PL) player with a strong international presence and multiple growth avenues.
