~ tAscO Q4FY12 ~

TASCO .. the traditional strong 4th quarter for Tasco did not happen this time. 

1. Q4 revenue had dropped around 8% and to make it even worst is the net profit had dropped 44% y-o-y due to higher general & administrative expanses and tax expense. This caused the profit margin reduced to 7.74% from 12.3%.
2. For full financial year 2012, it records an EPS of 28.89 cents, dropped from 34.59 cents in previous year due to lower revenue and higher general expenses & tax expenses. 
3. Higher tax expanses due to expiry of the tax incentive scheme enjoyed in previous years for one of its business segment which equivalent to additional around RM3.7M being paid as tax. 
4. PE increases to 7 based on today price of RM2.02 due to lower EPS. It's should be considered valued for a market capital of RM200m. 
5. ROE for FY12 is 11.3 , down from 14.3 last year. 
6. Full year dividend is 5.34 cents(interim) and 6.67cents (final) compare with 12.9 cents last year. 
7. Cash balance remained strong with around RM50m cash and FD in hands (RM0.5 cash per share) with borrowings of RM32m at which RM19m of it is long term bank loan. 
8. Current ratio remained strong at 2.37.
9. Retained profits are increasing as well as its NTA. There is mathematical chances to issue bonus share to increase share liquidity. 

In terms of segmental revenue and PBT, 

Tasco's business is still driven by it's contract logistics division, contributed around 81% of its overall net profit. This poorer quarter is actually caused by its lower revenue for its international business solutions and lower profit margin of its trucking division. In terms of profit margin, its international business solution segment is really bad, perhaps it's more prone to effect of raising oil price, poor imports exports trade,currency exchange, high operation costs and others. 

In the prospects column of the quarter report, it mentioned FY13 will be a challenging year  due to uncertain global economic which affected the manufacturing and international trade and eventually affected its logistic business. Else where, it also mentioned the group will continue to excel particularly in its contract logistics division, which is good as it provides the biggest contribution to its revenue and drives more strict cost control to pare down the operation costs. Furthermore, there is rumour Tasco will form a merger with other logistics parties to improve its competitive edge. 

I will sideline myself in invest in Tasco until a clearer picture is to be seen since I'm working in a manufacturing site which the business is not good currently. 

~ Tasco 泛亞物流 (TASCO) AnAlysIs ~

Tasco Berhad is a subsidiary of Yusen Logistics which in turn is a subsidiary of NYK group (Japan) . TASCO provides logistics solution covering air, sea and land transportation for domestic & international shipments. 

Tasco had just released its latest 3rd quarter report weeks ago. A slight drop in revenue but recorded a improved nett profit for the cumulative 9 months period for year 2012 compare with previous year thanks for a better profit margin control and better performance from the domestic logistic department. EPS for nine months is 21.1 cents. Foresee EPS for whole year 2012 will be around 30.0 cents as Tasco usually recorded higher earnings at fourth quarter. With this earning, the PE is around 6~7 based on the market price of RM2.00 per share, which considers undervalued. 

At the balance sheet, Tasco has around RM53millions cash and FD which translated into RM0.53 cash per share. Not a bad deal to fork out RM2k to own a tiny stake in a company that has RM530 cashback to you. Gearing ratio remained low at 0.40. Tasco has taken some term loans and it should not be a concern as the cash alone can settle all the short and long term loans. 

In terms of equity, Tasco has a considerable amount of retained profits and its NTA is well above its par value of RM1.00. Thus, there is a mathematical chances Tasco will perform a bonus share option to increase the market liquidity, perhaps 3-to-1 or 4-to-1? 

Looking back on its 5 years performance, ROE is around 10 and profit margin is around 7%. The management team should pay more attention to improve the ROE and profit margin but it shows some improving trends consecutively for the past 5 years. That's a good sign. 

Tasco started to give out dividends since year 2009. It has not fix any dividend policy but the dividend payout ratio is in the region of 36-43% for the past 3 years. As of this year, it just declared the first ever interim dividend of 5.4 cents. That is another good sign. 

Look at its segments performance, the international business division contributed around 40% of the overall revenue but only contributed to a mere 10% of overall profits before tax due to very poor profit margin. 

The contract logistics division served as the main contributor to Tasco's profit which contributed up to 80% of Tasco's overall profit. Perhaps that is the reason why Tasco invested and launched two new warehouses in Bangi and Shah Alam respectively in 2H 2011 to cater the customer demand for warehousing and contract logistics services and both warehouses will make full year contributions to financial year 2012. 

Tasco is yet another company with good fundamental that suits long term investors but one must keep attention on its every latest quarter reports due to its low profit margin as any big change of business will have a significant impact on it's earnings. 

Happy investing ~