Journey to Wealth
Tasco Bhd - Below Forecasts
Tasco's FY12 earnings of RM28.9m were softer than expected, accounting for only 81.4% of our projections. We believe the lacklustre performance was mainly due to the sluggish global economy, which affected export volume. FY13 would still be a challenging year for Tasco due to the weak global macroconomic outlook as well as the domestic political uncertainty. We are lowering Tasco's FY13f earnings to derive a new RM2.10 FV based on 7x FY13 PER. Downgrade to NEUTRAL.
Below expectations. Tasco's FY12 earnings of RM29.0m were below our and street estimates. The FY12 revenue of RM442.4m represented a 5.7% drop from FY11. Its international Business Solutions (IBS) unit posted a 14%, or RM26.8m, drop in revenue while its Domestic Business Solutions (DBS) unit managed to maintain revenue at the FY11 level of RM276m. Other key highlights are:
Below expectations. Tasco's FY12 earnings of RM29.0m were below our and street estimates. The FY12 revenue of RM442.4m represented a 5.7% drop from FY11. Its international Business Solutions (IBS) unit posted a 14%, or RM26.8m, drop in revenue while its Domestic Business Solutions (DBS) unit managed to maintain revenue at the FY11 level of RM276m. Other key highlights are:
- On a YTD basis, revenue from Contract Logistics, its largest revenue contributor,contracted by 5.1% y-o-y due to a weaker performance in its customs clearance and warehouse business segment.
- Its International Air Freight division recorded a 18.3% y-o-y decline in revenuedue to lower export shipments by major customers in the manufacturing sector amidst a gloomy global economic outlook.
- Nevertheless, the group's International Sea Freight and Domestic Truckingdivisions still managed to achieve 7.8% y-o-y and 15.7% y-o-y growth respectively, which somewhat mitigated the impact from the decline in the Contract Logistics and International Air Freight divisions.
Downgrade to NEUTRAL, with RM2.10 FV. The challenging environment facing Tasco prompts us to trim our FY13F earnings estimate by 17% to arrive at a lower FV of RM2.10, based on a 7x FY13 PER. As our FV provides a less than 10% potential upside, we are downgrading Tasco to NEUTRAL.
Source: OSK
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