MORNING CALL:8/8/23

MIDF thinks that Tasco still has the power to move people

Transcript

00:00 TASCO is what we have today after MIDF paid a visit to its operations in Shah Alam.

00:06 MIDF thinks it will have a better second half and has a buy on it.

00:09 However, it did lower its target price from RM1.87 to RM1.60,

00:13 but that still implies a possible upside of nearly double its latest close.

00:17 The new 620,000 square feet, four-storey Shah Alam Logistics Warehouse is on track to be handed over

00:23 to its new and existing E&E and retail customers in January 2024.

00:28 Likewise, the newly expanded 250,000 square feet Westport Logistics Centre

00:33 is expected to be handed over in December 2023 or January 2024.

00:38 The demand for warehouse space remains strong with the current utilisation rate exceeding 90%.

00:44 Therefore, TASCO has already started design works for Phase 2 of the SALC.

00:49 The revenue from the freight division is expected to decline now that freight rates have largely normalised,

00:54 with certain key lanes seeing rates lower than pre-pandemic levels due to lower demand.

00:58 However, this will be partly cushioned by an increase in shipment volume as trade activities recover.

01:04 Additionally, MIDF expects TASCO to enjoy better profit margins with its two upcoming new warehouses

01:10 as they yield better margins compared to its current rented warehouse.

01:14 Actually, MIDF also cut its FY24 and FY25 earnings by 12% and 14%

01:19 to better reflect the normalised freight market.

01:22 Bloomberg data has it at all buys, 4 buys for TASCO, with an average target price of RM1.47,

01:27 which is 66.5 cents more than its last close.

01:30 [Music]