Tasco Berhad - Slight miss on DBS weakness
Wed, 30-Jul-2025 08:47 am
by Jayden Tan • Apex Research

Counter

TASCO (5140)

Target Price (RM)

0.51

Recommendation

Hold

Results slightly below expectations. Tasco’s 1QFY26 CNP of RM9.2m accounted for only 16% of our full-year forecast, came in slightly below expectations despite 1H being a seasonally weaker period without festive-driven demand. The shortfall was primarily driven by slower-than-expected recovery in the Trucking and Cold Supply Chain businesses under the Domestic Business Segment (DBS), as efforts to secure new customers have yet to fully offset the loss of previous clients.

 

YoY. 1QFY26 CNP fell 13.3% YoY, mainly on the back of a 10.9% decline in revenue, dragged by DBS (Revenue -18%; Adjusted PBT -41%) and higher operating costs from the minimum wage hike. On a positive note, International Business Solutions (IBS) revenue remained relatively resilient (-0.8%), and margin expansion helped IBS adjusted PBT surge by 175.1%, supported by stabilized freight rates and the termination of a loss-making shipment lane for an FMCG client.

 

QoQ. CNP rose 76.4% qoq despite flat revenue, lifted by margin improvement from the IBS segment, particularly freight forwarding, and stronger segmental profitability. Conversely, DBS posted a sluggish qoq performance, mainly weighed down by the Trucking and Cold Supply Chain businesses.

 

Outlook. We maintain a cautious view on Tasco’s near-term prospects, with subdued demand and limited recovery visibility in the DBS segment amid erratic tariff policies and a competitive domestic environment. However, we expect overall margins in FY26 to remain relatively stable compared to last year, aided by the ended of one-off warehouse demolition impairments, a lower effective tax rate from unutilized tax credits, and more stable freight rates.

 

Earnings Revision. We cut our FY26F CNP by 17% to RM47.6m, following a downward revision in sales assumptions for the Trucking and Contract Logistics businesses under DBS due to slower-than-expected client acquisition. FY27F remains unchanged at RM64m.

 

Valuation. We maintain our HOLD call on Tasco with an unchanged TP of RM0.51, despite the earnings downgrade, as we raise our applied PER to 8.5x (from 7x), reflecting -0.5SD (from -1SD) to the 3-year mean, anticipating improved margins in FY26.

 

Risks. Prolonged geopolitical uncertainties and inflationary pressures arising from Trump tariffs may continue to suppress global demand, posing downside risks to Tasco’s performance, particularly in its international freight and logistics operations.

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