| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A logistics solutions provider has delivered 12MFY25 results that met market expectations, propelled by substantial topline growth and a robust increase in profit after tax and minority interests (PATAMI). The company’s revenue saw a 22% year-on-year increase, while PATAMI surged by 41%, significantly aided by a lower effective tax rate of 15% and strong contributions from non-taxable associates.
Performance Highlights
The impressive revenue growth was broad-based across key segments. Road freight transportation recorded a 16% year-on-year increase, driven by higher volumes on Thailand-Myanmar routes. Air freight forwarding saw a 64% surge, primarily from new orders from E&E customers in Malaysia and Vietnam, coupled with stable rates. Warehousing & 3PL operations also expanded by 11% year-on-year in Malaysia and Vietnam, benefiting from higher utilization and expanded logistics hubs. Furthermore, aerospace logistics rebounded with a 12% year-on-year growth following restructuring plans from a major budget carrier. Geographically, Vietnam emerged as the fastest-growing market, with over 100% growth to RM29 million, while the Philippines remained the largest contributor.
Despite a 2-percentage point dip in the gross profit margin to 24% year-on-year, attributed to pricing pressures in sea freight rates, pre-tax profit (PBT) more than doubled to RM17 million, significantly boosted by RM9 million from non-taxable associates. For the fourth quarter of FY25 (QoQ), revenue climbed 19%, though the gross profit margin faced further pressure, falling 5ppts to 18% due to lower project shipment contracts and continued moderation in sea freight rates.
Future Outlook and Strategic Direction
Looking ahead, the investment bank has revised its FY26E earnings forecast upwards by 7% to RM18.3 million, on the back of anticipated improved operational expenditure (OPEX) management and a 10% year-on-year topline growth. The company is poised to benefit from favorable aerospace industry tailwinds, including rising passenger traffic, fleet expansion by regional carriers, and higher aircraft utilization, particularly with “Visit Malaysia Year 2026” on the horizon. Management’s strategic focus includes strengthening revenue streams through customer and market diversification, optimizing operational efficiencies via advanced logistics technologies, and exploring partnerships to expand service offerings.
The company remains cautiously optimistic, noting the easing of inflationary pressures and a growing certainty in the economic outlook within the Asia-Pacific region. Its asset-light business model, niche strength in aerospace logistics, and strategic positioning to capture cross-border e-commerce opportunities are key strengths.
Recommendation and Key Risks
TA Securities maintains a recommendation for the company, setting a target price (TP) of RM0.25. This represents a potential upside of 25.0% from its last traded price of RM0.20. The valuation methodology has been adjusted from EV/EBITDA to PER to better reflect business normalizations.
Key risks identified include potential changes in local and international regulations, a decline in demand for sea and air freight services, fluctuations in freight rates, escalation of geopolitical tensions, and reliance on a major local carrier.
