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Shareholders’ return is one of the metrics used to measure the success of a company, as one of the main objectives of the management is to provide good returns for the money invested by shareholders.

In the logistics sector, from financial year 2019 (FY2019) to FY2021, Tasco Bhd stood out from the crowd with an adjusted compound annual growth rate of 10.6% for its total shareholders’ return, based on the awards methodology. This gave it bragging rights as the logistics player with the Highest Returns to Shareholders Over Three Years at The Edge Malaysia Centurion Club Corporate Awards 2022.

And the good times may well continue for Tasco, which counts Japanese logistics group Nippon Yusen Kabushiki Kaisha as its largest shareholder, as the global economy gradually reopens this year, with countries chalking up high year-on-year trade growth.

RHB Research analysts Lee Meng Horng and Raja Nur Aqilah Raja Ali, in a report dated April 13, 2022 — which was released prior to Tasco’s results for its fourth quarter ended March 31 — said the company was a beneficiary of a pick-up in industrial activities and trade volumes, and expected it to book robust growth in 4QFY2022. And indeed, it has.

During the quarter, Tasco reported a net profit of RM24.99 million, up 52.92% from the RM16.34 million it made in the previous corresponding quarter. With that, the company closed FY2022 with a 58.1% jump in net profit to RM65.25 million, from RM41.27 million in FY2021. It also declared a dividend per share of 2.5 sen for FY2022, slightly higher than the 2.125 sen it paid in FY2021.

Despite the strong set of results and dividend payout, there has not been much interest in Tasco’s shares, given that the counter has only appreciated a little more than 2% between April 1, 2021, and March 31, 2022, keeping the stock’s valuation at an undemanding level.

In a June 29 report, Lee and Aqilah ascribed Tasco with a forward price-earnings ratio (PER) of eight times. Note that Tasco’s historical mean PER over the past five years is 18 times.

Tasco, which had forecast that it would chalk up a higher profit for FY2023, made a very promising start to the year. Its net profit for the first quarter ended June 30, 2022, came in at RM24.43 million, about 55% more than the RM15.77 million it made in the previous corresponding quarter, based on its unaudited results filed to Bursa Malaysia, as revenue jumped 56.37% to RM453.56 million from RM290.05 million.

The results were above analysts’ expectations and represented 30% of their FY2023 earnings estimates for Tasco.

According to Lee and Aqilah in their June 29 report, Tasco’s management guided that volume for its freight segment was still around 20% to 30% lower from pre-pandemic levels. With Malaysia’s trade flows continuing its strong upward momentum in May despite being a historically subdued month, there are plenty of opportunities for the company to ride the wave of rising trade volume, they said.

“Also, the projected 5.3%-6.3% GDP growth for 2022, driven in part by gross exports that are projected to grow by 10.9% year on year, point to the likelihood of stable growth in volume throughput,” they added.

While other industries are concerned about rising cost pressures, things remain under control for Tasco at this juncture. The company has been able to pass rising costs to customers, especially fuel costs, as it includes a fuel adjustment factor in its quotations and contracts.

“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. On labour shortage, management is hopeful that about 600 foreign workers are bound to set foot in Malaysia within the next few months,” said the RHB Research analysts.

RHB Research has a target price of RM2.03 for Tasco, 119% higher than the 92.5 sen the counter was hovering at on Sept 6. MIDF Research’s target price for the stock is RM1.80.