Nov-3 Jan-4 Mar-4 May-4 Jul-4 Sep-4 Vol th Results Review, Buy (Maintained) Transport - Logistics Target Price: MYR3.90 Market Cap: USD9.2m Price: MYR3.06 Within Expectations Macro Risks Growth Value 3.80 3.60 3.40 3.20 Tasco Malaysia (TASCO MK) Price Close Relative to FTSE Bursa Malaysia KLCI Index (RHS) 66 57 48 We maintain our BUY call on Tasco with an unchanged TP of MYR3.90 (.3x FY5F P/E, 27.5% upside). HFY5 (Mar) results came in within expectations, with both international business solutions (IBS) and domestic business solutions (DBS) divisions contributing positively to the group. Contract logistics unit reported the strongest growth and we believe this could be the main earnings growth driver moving forward. 3.00 2.80 2.60 2.40 2.20 2.00.80 800 700 600 500 400 300 200 00 39 30 2 2 03 94 85 Results in line. Tasco Malaysia s (Tasco) HFY5 core net profit of MYR8.m (+43% YoY) came in within expectations, meeting 53% of our full-year forecast. Both its international business solutions (IBS) and domestic business solutions (DBS) wings recorded positive earnings growth YoY. Within IBS, air freight s revenue grew 0% YoY due to higher and urgent export shipments from its major customers in QFY5, while ocean freight also recorded slightly higher revenue of 2.5% YoY, contributed by existing customers of medical supplies and retail sectors. For the local business, the contract logistics division remained strong with a revenue growth of 28% YoY, mainly driven by warehouse and inplant businesses, newly-secured fast-moving consumer goods (FMCG) customer, coupled with increased export shipments from existing customers. Among all divisions, contract logistics recorded the strongest growth of 78.7% YoY. Source: Bloomberg Avg Turnover (MYR/USD) 0.7m/0.05m Cons. Upside (%) -24.8 Upside (%) 27.5 52-wk Price low/high (MYR) 2.05-3.62 Free float (%) 25 Share outstanding (m) 00.0 Shareholders (%) Nippon Yusen KK 65.0 Real Fortune Portfolio SB 9.8 Air freight contribution normalises. Air freight contribution normalised in 2QFY5 as expected as there were urgent shipments in QFY5, which boosted its revenue. Nonetheless, we believe that the contract logistics division, which has performed well so far, will be the main driver of Tasco s future earnings growth. Brightening outlook. We are of the view that global and domestic economies are improving gradually, which should bode well for Tasco s earnings prospects moving forward. Maintain BUY. We maintain our BUY recommendation and TP of MYR3.90, based on an unchanged.3x FY5F P/E, which is the industry average. Our TP implies a 27.5% upside. Share Performance (%) YTD m 3m 6m 2m Absolute 46.4 8.9 (3.) 6.8 44.3 Relative 49.6 7.9 (0.) 20.9 43.5 Shariah compliant Jerry Lee +603 9207 7622 jerry.lee@rhbgroup.com Forecasts and Valuations Mar-2 Mar-3 Mar-4 Mar-5F Mar-6F Total turnover (MYRm) 464 443 449 550 572 Reported net profit (MYRm) 33.2 28.0 25.6 34. 36.6 Recurring net profit (MYRm) 33.2 28.0 25.6 34. 36.6 Recurring net profit growth (%) 25.7 (5.6) (8.5) 32.8 7.6 Recurring EPS (MYR) 0.33 0.28 0.26 0.34 0.37 DPS (MYR) 0. 0.05 0.04 0.05 0.05 Recurring P/E (x) 9.2 0.9.9 9.0 8.4 P/B (x).25.8.0.02 0.94 P/CF (x) 7.46 7.24 8.0 9.32 7.62 Dividend Yield (%) 3.6.6.3.6.6 EV/EBITDA (x) 5.28 5.50 5.80 4.5 3.55 Return on average equity (%) 4.3. 9.6.8.7 Net debt to equity (%) net cash net cash net cash net cash net cash Our vs consensus EPS (adjusted) (%) 0.0 0.0 See important disclosures at the end of this report Powered by EFA TM Platform
Figure : HFY5 results table FYE Mar (MYRm) 2QFY4 QFY5 2QFY5 QoQ (%) YoY (%) HFY4 HFY5 YoY (%) Comments Revenue 8. 34.8 22.6 (9.0) 3.9 222.4 257.4 5.8 Positive growth from both IBS and DBS divisions. EBITDA 3.2 7.6 5. (4.4) 4.0 24.6 32.5 32.2 EBITDA Margin.2 3. 2.3. 2.6 (%) Depreciation (3.9) (4.2) (4.2) (.7) 6.7 (7.7) (8.4) 8.6 EBIT 9.3 3.4 0.9 (8.4) 7. 6.8 24. 43. EBIT Margin (%) 7.9 9.9 8.9 7.6 9.4 Interest expense (0.3) (0.2) (0.3) 43.2 9.7 (0.6) (0.6) (5.) Interest income 0.2 0.2 0.2 (4.0) (2.9) 0.4 0.3 (0.9) Associates 0.2 0.2 0. (6.9) (5.) 0.3 0.3 0.3 EI/Others 0.0 0.0 0.0 nm nm 0.0 0.0 nm Pretax profit 9.4 3.3 0.9 (8.2) 6.2 6.9 24.2 43. Pretax Margin (%) 7.9 9.9 8.9 7.6 9.4 Tax (2.4) (3.3) (2.8) (5.9) 4.4 (4.2) (6.) 44.2 Effective tax rate (25.9) (24.8) (25.5) (25.0) (25.) (%) Minority Interest (0.0) (0.0) (0.0) (6.) 44.4 (0.0) (0.) 62.9 Net Profit 6.9 0.0 8. (8.9) 6.8 2.7 8. 42.7 Results in line Core Profit 6.9 0.0 8. (8.9) 6.8 2.7 8. 42.7 Net Margin (%) 5.9 7.4 6.6 5.7 7.0 Source: Company data Figure 2: Historical quarterly results FYE Mar (MYRm) 3QFY2 4QFY2 QFY4 2QFY4 3QFY4 4QFY4 5QFY4 QFY5 2QFY5 Revenue 2.2 04.5 93.0 04.3 8. 28. 6. 34.8 22.6 EBITDA 3.8 2.6 9.6 2.8 4.6 4.6 2.8 7.6 5. EBITDA Margin (%) 2. 0.3 2.3 2.4.4. 3. 2.3 Depreciation (3.9) (3.9) (3.9) (3.8) (3.9) (3.9) (4.3) (4.2) (4.2) EBIT 9.9 8.8 5.7 9.0 0.7 0.7 8.6 3.4 0.9 EBIT Margin (%) 8.8 8.4 6.2 8.6 9. 8.4 7.4 9.9 8.9 Interest expense (0.4) (0.4) (0.3) (.8) (0.3) (0.3) (0.3) (0.2) (0.3) Interest income 0.2 (.6) 0.2 0.2 0.2 0.2 0.2 0.2 0.2 Associates 0.2 0. 0.2 0.2 0.2 0.2 - - 0. EI/Others - - 0. - - - - - - Pretax profit 9.9 6.9 6.0 7.5 9.4 0.7 8.5 3.3 0.9 Pretax Margin (%) 8.9 6.6 6.4 7.2 7.9 8.4 7.3 9.9 8.9 Tax (2.7) 0.9 (.5) (.8) (2.4) (2.4) (3.4) (3.3) (2.8) Effective tax rate (%) (27.0) 3.5 (25.6) (23.8) (25.9) (22.7) (39.7) (24.8) (25.5) Minority Interest (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) Net Profit 7.2 7.8 4.4 5.7 6.9 8.3 5. 0.0 8. Core Profit 7.2 7.8 4.3 5.7 6.9 8.3 5. 0.0 8. Net Margin (%) 6.4 7.5 4.6 5.5 5.9 6.5 4.4 7.4 6.6 Source: Company data See important disclosures at the end of this report 2
Financial Exhibits Profit & Loss (MYRm) Mar-2 Mar-3 Mar-4 Mar-5F Mar-6F Total turnover 464 443 449 550 572 Cost of sales (339) (39) (336) (406) (420) Gross profit 25 24 3 44 5 Gen & admin expenses (89) (90) (8) (99) (04) Other operating costs 2 2 Operating profit 37 35 34 45 48 Operating EBITDA 53 50 47 62 66 Depreciation of fixed assets (6) (5) (2) (7) (8) Operating EBIT 37 35 34 45 48 Net income from investments 0 Interest income Interest expense () (2) () () () Exceptional income - net (0) (0) 0 - - Pre-tax profit 37 35 35 45 49 Taxation (4) (7) (9) () (2) Minority interests (0) (0) 0 0 0 Profit after tax & minorities 33 28 26 34 37 Reported net profit 33 28 26 34 37 Recurring net profit 33 28 26 34 37 Cash flow (MYRm) Mar-2 Mar-3 Mar-4 Mar-5F Mar-6F Operating profit 37 35 34 45 48 Depreciation & amortisation 6 5 2 7 8 Change in working capital (2) (3) (7) (4) (2) Other operating cash flow (3) () 5 (4) (2) Operating cash flow 48 47 45 44 52 Interest received () () - () () Interest paid - Tax paid (8) (5) (7) () (2) Cash flow from operations 4 42 38 33 40 Capex (4) (20) (27) (20) (20) Other investing cash flow 2 Cash flow from investing activities (40) (9) (25) (9) (9) Dividends paid (0) (2) (7) (0) () Increase in debt (9) (6) Other financing cash flow 0 - - - - Cash flow from financing activities 2 (2) (3) 0 (0) Cash at beginning of period 48 50 53 52 67 Total cash generated 3 3 (0) 4 2 Implied cash at end of period 50 53 52 67 88 See important disclosures at the end of this report 3
Financial Exhibits Balance Sheet (MYRm) Mar-2 Mar-3 Mar-4 Mar-5F Mar-6F Total cash and equivalents 50 53 52 67 88 Inventories 0 0 0 0 0 Accounts receivable 67 67 82 83 86 Other current assets 28 27 28 28 28 Total current assets 45 46 63 78 202 Total investments 6 6 5 6 7 Tangible fixed assets 95 99 208 2 23 Intangible assets - - - - Total non-current assets 202 204 23 27 220 Total assets 347 35 376 395 422 Short-term debt 3 3 Accounts payable 27 28 37 33 35 Other current liabilities 32 22 28 28 28 Total current liabilities 62 63 76 73 74 Total long-term debt 28 8 3 3 3 Other liabilities 2 9 9 9 9 Total non-current liabilities 40 27 22 22 22 Total liabilities 02 90 98 95 96 Share capital 00 00 00 00 00 Retained earnings reserve 43 58 75 99 225 Other reserves 2 2 2 Shareholders' equity 244 260 277 300 326 Minority interests 0 Other equity 0 (0) 0 0 0 Total equity 245 260 278 30 327 Total liabilities & equity 347 35 376 395 422 Key Ratios (MYR) Mar-2 Mar-3 Mar-4 Mar-5F Mar-6F Revenue growth (%) 3. (4.4).3 22.5 4.0 Operating profit growth (%).9 (4.9) (2.5) 30.5 7.6 Net profit growth (%) 22.2 (5.7) (8.5) 32.8 7.6 EPS growth (%) 22.2 (5.7) (8.5) 32.8 7.6 Bv per share growth (%) 0.9 6.3 6.7 8.2 8.7 Operating margin (%) 8.0 8.0 7.7 8.2 8.5 Net profit margin (%) 7.2 6.3 5.7 6.2 6.4 Return on average assets (%) 0. 8.0 7. 8.8 9.0 Return on average equity (%) 4.3. 9.6.8.7 Net debt to equity (%) (7.9) (8.4) (0.2) (4.2) (9.4) DPS 0. 0.05 0.04 0.05 0.05 Recurrent cash flow per share 0.4 0.42 0.38 0.33 0.40 See important disclosures at the end of this report 4
Jan-2 Jan-3 Jan-4 Jan-5 Jan-6 Jan-2 Jan-3 Jan-4 Jan-5 Jan-6 SWOT Analysis Having Nippon Yusen Kabushiki Kaisha (NYK) as its main shareholder gives the group an advantage in securing more business with Japanese clients Undergoing operation kaizen activities to increase sales and improve profit margin The global economy is expected to see stronger growth in 204-205 A slowdown in international trade could impact the company s performance A slower-thananticipated economic recovery could drag down its overall performance Highly-dependent on Malaysia and the world s economic performance P/E (x) vs EPS growth P/BV (x) vs ROAE 4 40% 6% 2 3% 4% 0 23% % 8 4% 9% 6 6% 7% 4-3% 0 5% 2 -% 0 2% 0-20% 0 0% P/E (x) (lhs) EPS growth (rhs) P/B (x) (lhs) Return on average equity (rhs) Company Profile Tasco Bhd is a leading third-party logistics provider. See important disclosures at the end of this report 5
2.33 na.6.32.9.93 2.0 2.8 2.48 2.56 2.35 2.0 2.30 2.30 3.00 3.90 Recommendation Chart 4.00 3.50 Recommendations & Target Price Price Close 3.00 2.50 2.00.50.00 0.50 Nov-09 Feb- Jun-2 Sep-3 Buy Neutral Sell Trading Buy Take Profit Not Rated Source: RHB, Bloomberg Date Recommendation Target Price Price 204-09-09 Buy 3.90 3.48 204-05-2 Buy 3.00 2.57 204-03-26 Neutral 2.30 2.48 204-02-9 Buy 2.30 2.25 203-09-25 Buy 2.30 2.00 203-08-20 Neutral 2.0 2.0 203-05-4 Neutral 2.35 2.22 203-02-22 Buy 2.56 2.02 203-02-22 Neutral 2.0 2.02 202-08-09 Buy 2.56 2.8 Source : RHB, Bloomberg See important disclosures at the end of this report 6
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