KUALA LUMPUR (April 22): Tasco Bhd’s move to acquire Sabah-based cold chain logistics company Hypercold Logistics Sdn Bhd will further cement its leading cold chain services in Malaysia, according to MIDF Research.

Its analyst Ummar Fitri said in a note today that the acquisition marks Tasco's first foray into East Malaysia as the group has no cold chain logistics presence there.

According to him, Tasco’s Cold Supply Chain Logistics (CSCL) is currently the largest cold chain provider in Malaysia with an estimated 35% market share of the segment, with key customers consisting of fast-moving consumer goods retailers, food and beverage players and pharmaceutical groups.

Its biggest cold storage warehouse is in Shah Alam with a 26,000 pallet capacity and a built-up area of 330,000 square feet. Other locations include Pulau Indah, Port Klang and Bukit Raja,

“Tasco currently has 50,000 to 52,000 pallet capacity. With additions of Hypercold, Tasco capacity will increase to approximately 53,000 to 56,000 pallet capacity,” he said.

He is revising Tasco earnings for FY21 to RM41.4 million (from RM41 million), FY22 to RM46 million (from RM45.7 million).

“We apply conservative assumptions on the impact of earnings forecast from this acquisition. Our estimates follow the parameters of historical precedent with single digit revenue growth for Hypercold and high double digit profit margin for the target company,” he said.

Moving forward, he expects Tasco to see improved earnings underpinned by growing top line for International Business Solutions (IBS), brisk recovery on Domestic Business Solution segment (DBS),and margin expansion via the Investment Tax Allowance scheme from Malaysian Investment Development Authority (MIDA).

“All things considered; we maintain our Buy call for Tasco,” he said.

He also revised his target price for Tasco to RM1.38 per share from RM1.31 previously, post-split exercise.

“Our target price is derived by pegging our FY22 earnings per share to a revised forward price to earnings ratio of 24 times (previously 23 times). Moving forward, we believe the earnings outlook for Tasco will remain sustainable,” he added.

Tasco announced yesterday that its 70%-owned unit, Tasco Yusen Gold Cold Sdn Bhd (TYGC) is teaming up with Swift Integrated Logistics Sdn Bhd to jointly acquire 50% stake in Hypercold Logistics Sdn Bhd for RM10.55 million.

Hypercold is involved in the provision of cold chain related logistics, warehouse storage, and transportation of goods.

According to the group, Hypercold has the largest cold chain warehouse in Sabah with a capacity of 3,000 pallet space and eight temperature-controlled trucks.

At 10.33 am, Tasco fell 1 sen or 0.81% to RM1.23, valuing the group at RM960 million.