RHB Research has maintained a “Buy” recommendation for Tasco Bhd with a target price of RM2.03 adding that its TP is is pegged to a 19x P/E on FY23F EPS (+1SD from its 5-year mean), and includes a 2% ESG premium. At 8x forward P/E, the stock trades at an undemanding multiple to its historical mean and regional major 3PL peers.
Its valuation remains undemanding at 8x FY23F (Mar) P/E, and we can expect its positive earnings streak to sustain despite supply chain challenges and cost pressures, thanks in part to multiple growth avenues driven by capacity expansion and new customer win.
RHB said that it recently visited TASCO’s facilities and came away feeling positive about the group’s resilient performance, sustain demand growth and pricing power, on top of the encouraging volume throughput growth and favourable freight rates.
RHB said that it seeks comfort in the fact that cost pressures remain under control for TASCO at this juncture and a group-wide cost pass-through exercise to customers is also taking place, at a range of between 8-25% for all services.
It said that the rise in fuel costs is a non-issue – the Fuel Adjustment Factor (FAF) is in place as part of its quotation and contracts ever since fuel prices were on floating terms. Elsewhere, the rising labour, utility, and compliance costs remain but the negotiation for re-pricing with all customers should also help to fuel growth moving forward.
