Cementing its position as a top-notch logistics company

Cementing its position as a top-notch logistics company

05 Aug 2024

Tasco

It seems that Tasco Bhd (KL:TASCO), which is almost 65% controlled by Japanese logistics giant Nippon Yusen Kabushiki Kaisha (commonly known as NYK), is carving quite a comfortable spot in the annals of The Edge Malaysia Centurion Club Corporate Awards, having taken home the honours in 2019, 2022 and again this year.

The cross-border transportation, warehousing and distribution outfit has bagged the Highest Growth in Profit After Tax (PAT) Over Three Years award in the fourth edition of the Centurion awards, based on its impressive compound annual growth rate (CAGR) of 117% from FY2020 to FY2023.

In its FY2020 ended March 30, Tasco raked in a net profit of RM8.9 million, which jumped 364% to RM41.3 million in FY2021. It then rose by about 58% to RM65.2 million in FY2022 and by 39% to RM90.8 million in FY2023.

As its bottom line grew from strength to strength, Tasco’s return on equity (ROE), which was 9.12% in FY2021, jumped to 13.23% in FY2022 and a further 16.3% in FY2023. This gave it an adjusted ROE, based on Centurion awards methodology, of a respectable 14% over the three years.

The logistics company’s share price, which rose 8.6% from 96.7 sen (adjusted) at end-March 2021 to RM1.05 at end-March 2022, shed 22.7% to 81.2 sen at end-March 2023 before inching up 0.37% to 81.5 sen at end-March this year. The movements translate to an adjusted decline of 4.43% over the three-year period.

With its two substantial shareholders NYK and executive chairman Lee Check Poh (owns 9.89%) controlling almost 75% of the company’s stock and are unlikely to sell any shares, it is no wonder Tasco is thinly traded.

To its credit as well, the company has been regularly paying out dividends, which increased from 0.25 sen in FY2020 to 1.5 sen in FY2021, and further to 2.5 sen in FY2022 and 3.5 sen in FY2023.

FY2023 also marked the second consecutive year Tasco has achieved over RM1 billion in revenue, hitting a record RM1.61 billion, up almost 9% from RM1.48 billion in FY2022.

While many local logistics providers tend to offer a single transportation mode or service, Tasco does not appear to be overly reliant on a particular business segment. It has three main revenue generators: contract logistics, which provides warehousing and haulage services, contributed 34% of FY2023’s revenue or RM545.7 million; air freight forwarding, which provided 30% of FY2023 turnover or RM485.8 million; and ocean freight forwarding, which churned out 18% of FY2023 revenue or RM287.4 million.

This ensures that if any one segment falters, it will not overly impact revenue streams and weigh the company down.

Also in its favour is its reach, as the company is part of the global network of 681 locations under the NYK banner, with more than 27 logistics centres domestically.

On the domestic front, Tasco has an asset base of over 500 prime movers, making it among the largest hauliers in the country, with 300,000 sq m of warhehouse space.

In 2017, Tasco ventured into the cold chain logistics segment, which deals with the safe transport of temperature-sensitive goods and has higher margins of low teens compared with other logistics segments’ single-digit numbers. It invested close to RM216 million to acquire Gold Cold Transport Sdn Bhd and MILS Cold Chain Sdn Bhd. Two years later, Tasco hived off a 30% stake in its cold chain logistics segment held under Tasco Yusen Gold Cold Sdn Bhd to Japan Overseas Infrastructure Investment Corp for Transport and Urban Development for RM125 million.

More recently, after several strategic acquisitions, including a 50:50 acquisition of Hypercold Logistics Sdn Bhd in 2021 in Sabah with a local partner as it expanded into East Malaysia, Tasco Yusen Gold Cold has grown to become one of the largest cold chain logistics providers in Malaysia. The acquisition also made Tasco the largest third-party logistics cold chain warehouse facility operator in Sabah.

At the end of March this year, the cut-off date for the Centurion awards, Tasco’s market capitalisation was only RM652 million. Tasco has been largely trading below the RM1 band since mid-March 2021, making it a penny stock.

Considering its strong parentage — NYK is one of the largest transportation companies in the world, a billion-dollar company with a market capitalisation in excess of US$13 billion (RM60.89 billion) — and the strides it has been making on the local and regional front, Tasco should be under the spotlight.

Source: The Edge Malaysia