TASCO - Still Going Strong (OSK)

TASCO’s 9MFY11 net earnings of RM20.6m were within our expectations, coming in 26.5% higher y-o-y and accounting for about 72% of our FY11 forecast. Growth was strong despite the weak global economic conditions owing to the higher volume and shipments handled by its airfreight as well as domestic business solutions divisions, which chalked up commendable 24% and 21% growth y-o-y respectively. Its contract logistics segment, meanwhile, will continue to be the key driver on account of its expanding MNC clientele and growing warehousing business. We believe the group will declare a decent dividend payout ratio of at least 33% this year. Maintain BUY at FV of RM2.10, based on 7x mid-FY11-12 EPS.