Asean Research
7 August 2025
TASCO: Steady Sailing On Diversified Portfolio; Stay BUY
- Keep BUY and MYR0.86 TP, 80% upside with c.4% FY26F (Mar) yield. While TASCO may encounter headwinds from domestic and external factors, there are reasons to be positive on the stock. This is premised on the expectation of better quarters ahead, supported by: i) Improved volumes (buoyed by festive seasons); ii) the integrated logistics services (ILS) tax incentive; iii) new customer wins. We still like this leading ILS player for its diversified businesses, solid cash flow, healthy dividend yields and cheap valuation.
- Results recap. 1QFY26 results fell short of expectations, partially due to additional (MYR5m per quarter vs 1QFY25’s MYR3.8m) costs (+32.1% YoY) for general headquarters (GHQ) and regional headquarters (RHQ), as Yusen Group embarks on the next 5-year plan, and a higher effective tax rate (17.5% vs 1Q25 9.5%). However, should the budgeted expenses not be fully utilised, there will be a clawback in 4QFY26, as seen in prior years. To recap, TASCO’s domestic business solutions or DBS segment’s PBT fell by 41% YoY (+264% QoQ) in 1QFY26, largely on lower contributions from the contract logistics (CL), cold supply chain (SCS), and trucking (TD) units. Within the CL segment, warehousing PBT declined by 11% on the lesser movement of goods amid slower demand, as well as inefficiency in operations due to new customer process implementations, partially offset by stronger customs clearance PBT, which doubled QoQ on top of a 78% rise in haulage PBT.
- Leveraging on ILS tax incentive. Management plans to incur an additional MYR250m on qualifying expenditure by 2026 (cumulative MYR556.5m ILS capex), to leverage on the ongoing ILS tax incentive before the incentive period ends in 2027. This includes two new projects at Shah Alam and Northport, and a new Penang regional hub for a healthcare client. These could further elevate the current unutilised tax credits of c.MYR31.4m by another MYR36m (which can be taken up indefinitely). TASCO’s current gearing is at a comfortable 0.51, but this is expected to inch up with the planned expansions.
- Outlook. Management noted that there have been more enquiries and tenders YoY, but the focus is on securing more regional hub business – which has been proven to be stickier and generates better yields. Management expects stronger quarters ahead as the logistics business cycle tends to pick up in 2H, boosted by festive periods and additional warehouse space and improved efficiency.
- TP and rating. We cut FY26-28F earnings by 14.9%, 14.9% and 13.7% as we factored in lower margin contributions from the CL, SCS, and TD segments, in view of the challenging operating environment. Our TP remains at MYR0.86, pegged to 12x CY26F P/E, with a 2% ESG premium imputed. Key downside risks: Loss of key customers, slowdown in trade activities, and a narrowing of operating margins.
Target Price (Return): MYR0.86 (+80%)
Price (Market Cap): MYR0.48 (USD89.9m)
ESG score: 3.1 (out of 4)
Avg Daily Turnover (MYR/USD): 0.04m/0.01m
| YTD | 1m | 3m | 6m | 12m | |
|---|---|---|---|---|---|
| Absolute | (36.7) | (4.1) | (8.7) | (32.2) | (41.7) |
| Relative | (30.5) | (3.5) | (9.0) | (29.4) | (39.6) |
| 52-wk Price low/high (MYR) | 0.47 – 0.87 | ||||
Forecasts and Valuation
| Mar-23 | Mar-24 | Mar-25 | Mar-26F | Mar-27F | |
|---|---|---|---|---|---|
| Total turnover (MYRm) | |||||
| 1,607 | 1,073 | 1,012 | 1,126 | 1,243 | |
| Recurring net profit (MYRm) | |||||
| 91 | 63 | 40 | 53 | 61 | |
| Recurring net profit growth (%) | |||||
| 17.4 | (30.4) | (36.9) | 34.1 | 13.2 | |
| Recurring P/E (x) | |||||
| 4.19 | 6.02 | 9.53 | 7.11 | 6.28 | |
| P/B (x) | |||||
| 0.6 | 0.6 | 0.6 | 0.6 | 0.5 | |
| P/CF (x) | |||||
| 2.78 | 3.46 | 1.98 | 17.73 | 4.62 | |
| Dividend Yield (%) | |||||
| 7.4 | 4.9 | 2.6 | 4.2 | 4.2 | |
| EV/EBITDA (x) | |||||
| 2.65 | 5.03 | 5.75 | 4.76 | 4.62 | |
| Net debt to equity (%) | |||||
| 6.2 | 31.9 | 22.5 | 30.9 | 31.0 | |
Overall ESG Score: 3.1 (out of 4)
E Score: 3.0 (GOOD)
S Score: 3.0 (GOOD)
G Score: 3.3 (EXCELLENT)
Please refer to the ESG analysis on the next page
Note: Small cap stocks are defined as companies with a market capitalization of less than USD0.5bn.
Emissions And ESG
Trend analysis: Emissions remained largely unchanged
| Mar-22 | Mar-23 | Mar-24 | Mar-25 | |
|---|---|---|---|---|
| Scope 1 | 2,334 | 24,371 | 26,858 | 26,219 |
| Scope 2 | 27,129 | 23,291 | 22,356 | 28,263 |
| Scope 3 | na | 720 | 914 | 1,352 |
| Total emissions | 29,464 | 48,381 | 50,128 | 55,833 |
Latest ESG-Related Developments
TASCO started reporting its greenhouse gas (GHG) emissions in 2020 to ensure greater disclosure and accountability of its carbon footprint.
It is also a constituent stock of the FTSE4Good Index, reflecting the company’s satisfactory ESG practices and initiatives.
The group has also launched over 10 initiatives to lower the impact of its GHG emissions.
ESG Unbundled
Overall ESG Score: 3.1 (out of 4)
Last Updated: 6 Aug 2025
E Score: 3.0 (GOOD)
The group has identified and begun carrying out various eco-friendly initiatives centred on environmental protection and stewardship.
S Score: 3.0 (GOOD)
Comprehensive measures have been taken to ensure the safety and livelihood of its employees, as well as corporate social responsibility contributions.
G Score: 3.3 (EXCELLENT)
Clear transparency practices and objective targets are in place to ensure stakeholder engagement and management efficiency.
ESG Rating History
Financial Exhibits
| Mar-23 | Mar-24 | Mar-25 | Mar-26F | Mar-27F | |
|---|---|---|---|---|---|
| Recurring EPS | 0.11 | 0.08 | 0.05 | 0.07 | 0.08 |
| DPS | 0.04 | 0.02 | 0.01 | 0.02 | 0.02 |
| BVPS | 0.74 | 0.79 | 0.80 | 0.84 | 0.90 |
| Mar-23 | Mar-24 | Mar-25 | Mar-26F | Mar-27F | |
|---|---|---|---|---|---|
| Recurring P/E (x) | 4.19 | 6.02 | 9.53 | 7.11 | 6.28 |
| P/B (x) | 0.6 | 0.6 | 0.6 | 0.6 | 0.5 |
| FCF Yield (%) | 10.7 | (25.9) | 26.6 | (20.7) | (4.7) |
| Dividend Yield (%) | 7.4 | 4.9 | 2.6 | 4.2 | 4.2 |
| EV/EBITDA (x) | 2.65 | 5.03 | 5.75 | 4.76 | 4.62 |
| EV/EBIT (x) | 3.61 | 8.19 | 11.19 | 7.37 | 7.17 |
| Mar-23 | Mar-24 | Mar-25 | Mar-26F | Mar-27F | |
|---|---|---|---|---|---|
| Total turnover | 1,607 | 1,073 | 1,012 | 1,126 | 1,243 |
| Gross profit | 200 | 154 | 146 | 191 | 211 |
| EBITDA | 177 | 130 | 102 | 140 | 148 |
| Depreciation and amortisation | (47) | (50) | (50) | (49) | (53) |
| Operating profit | 130 | 80 | 53 | 90 | 95 |
| Net interest | (13) | (14) | (16) | (22) | (19) |
| Pre-tax profit | 118 | 66 | 37 | 68 | 77 |
| Taxation | (28) | (9) | (13) | (11) | (13) |
| Reported net profit | 88 | 54 | 21 | 53 | 61 |
| Recurring net profit | 91 | 63 | 40 | 53 | 61 |
| Mar-23 | Mar-24 | Mar-25 | Mar-26F | Mar-27F | |
|---|---|---|---|---|---|
| Cash flow from operations | 136 | 110 | 192 | 21 | 82 |
| Capex | (96) | (208) | (91) | (100) | (100) |
| Cash flow from investing activities | (92) | (202) | (85) | (100) | (100) |
| Dividends paid | (13) | (30) | (20) | (16) | (16) |
| Cash flow from financing activities | (2) | 47 | (130) | (13) | (10) |
| Cash at beginning of period | 87 | 241 | 167 | 160 | 90 |
| Net change in cash | 43 | (45) | (23) | (92) | (27) |
| Ending balance cash | 131 | 197 | 144 | 67 | 62 |
| Mar-23 | Mar-24 | Mar-25 | Mar-26F | Mar-27F | |
|---|---|---|---|---|---|
| Total cash and equivalents | 241 | 167 | 160 | 90 | 81 |
| Tangible fixed assets | 586 | 758 | 761 | 811 | 859 |
| Total investments | 20 | 20 | 21 | 21 | 21 |
| Total assets | 1,535 | 1,673 | 1,898 | 1,648 | 1,750 |
| Short-term debt | 89 | 131 | 94 | 94 | 94 |
| Total long-term debt | 193 | 259 | 225 | 228 | 234 |
| Total liabilities | 871 | 974 | 1,190 | 899 | 953 |
| Total equity | 664 | 699 | 708 | 749 | 797 |
| Total liabilities & equity | 1,535 | 1,673 | 1,898 | 1,648 | 1,750 |
| Mar-23 | Mar-24 | Mar-25 | Mar-26F | Mar-27F | |
|---|---|---|---|---|---|
| Revenue growth (%) | 8.5 | (33.2) | (5.7) | 11.3 | 10.4 |
| Recurrent EPS growth (%) | 17.4 | (30.4) | (36.9) | 34.1 | 13.2 |
| Gross margin (%) | 12.4 | 14.3 | 14.4 | 17.0 | 17.0 |
| Operating EBITDA margin (%) | 11.0 | 12.1 | 10.1 | 12.4 | 11.9 |
| Net profit margin (%) | 5.5 | 5.0 | 2.1 | 4.7 | 4.9 |
| Dividend payout ratio (%) | 31.9 | 34.8 | 47.6 | 30.0 | 26.5 |
| Capex/sales (%) | 6.0 | 19.4 | 9.0 | 8.9 | 8.0 |
| Interest cover (x) | 9.67 | 5.68 | 3.33 | 4.05 | 5.12 |
Recommendation Chart
| Date | Recommendation | Target Price | Price |
|---|---|---|---|
| 2025-08-06 | Buy | 0.86 | 0.48 |
| 2025-05-02 | Buy | 0.86 | 0.54 |
| 2025-02-21 | Buy | 1.00 | 0.69 |
| 2024-10-30 | Buy | 1.12 | 0.72 |
| 2024-08-05 | Buy | 1.15 | 0.81 |
| 2024-07-31 | Buy | 1.15 | 0.87 |
| 2024-05-02 | Buy | 1.15 | 0.83 |
| 2024-02-05 | Buy | 1.19 | 0.81 |
| 2024-01-30 | Buy | 1.35 | 0.83 |
| 2023-11-22 | Buy | 1.35 | 0.81 |
| 2023-11-20 | Buy | 1.33 | 0.80 |
| 2023-10-02 | Buy | 1.45 | 0.79 |
| 2023-07-28 | Buy | 1.70 | 0.82 |
| 2023-07-13 | Buy | 1.70 | 0.84 |
| 2023-04-28 | Buy | 1.83 | 0.90 |
RHB Guide to Investment Ratings
Buy: Share price may exceed 10% over the next 12 months
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
Take Profit: Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall by more than 10% over the next 12 months
Not Rated: Stock is not within regular research coverage
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