RHB Investment Bank Bhd (RHB Research) maintained its BUY call on TASCO Bhd but lowered its target price to RM0.62 from RM0.66, implying 56% upside, as it expects earnings to recover in the second half of FY2027 after a weaker-than-expected first quarter.
RHB Research cut its FY2027 to FY2029 earnings forecasts by about 7% each after TASCO’s 1QFY2027 core earnings fell 29% year-on-year and 23% quarter-on-quarter to RM7.2 million. The weaker result was mainly due to softer ocean freight forwarding, contract logistics and cold supply chain performance.
The research house said ocean freight forwarding was affected by vessel space shortages among global carriers amid the Middle East conflict. This pushed high-value data centre cargo towards air freight forwarding, which performed better than expected and could continue benefiting into 2QFY2027.
Softer contract logistics and cold supply chain activity is expected to persist, although new warehouses at Shah Alam Logistics Centre and Northport should provide some relief. The facilities, with a combined capacity of 700,000 sq ft, are expected to begin operations in August and could generate monthly savings of about RM200,000 to RM300,000.
RHB Research also expects TASCO to benefit from an integrated logistics services tax rebate in 4QFY2027, with management guiding for an effective tax rate below 20%.
The revised target price is based on an unchanged 12 times price-to-earnings multiple, while the research house noted TASCO is trading at about eight times earnings, around one standard deviation below its five-year average of 10 times.
