Tasco- an attractive BUY

Background

Trans-Asia Shipping Corp Bhd ('Tasco') is principally engaged as a total logistics solutions provider, involving an integration of sea, land and air logistics solutions. Its subsidiaries are engaged in truck rental; provision of truck repair and maintenance; provision of logistic related services; forwarding; handling agents; and, freight forwarders. Tasco was only listed in December 2007 where the IPO

Recently, its 27.7% shareholder, Nippon Yusen Kabushiki Kaisha (NYK Group) has agreed to buy more shares from Tasco's chairman, Tan Sri Asmat Kamaludin ('Asmat'), bringing its total to 61.32 per cent. NYK bought 70%-stake of Kombinasi Restu (M) Sdn Bhd ('Kombinasi') from Asmat, for RM13.5 million. Kombinasi holds 33.58%-stake of Tasco. Assuming that Kombinasi's sole asset is the 33.58%-stake in Tasco and it is free from encumbrances, the transaction would be valuing Tasco at RM0.57 per share. Despite increasing its stake to 61.32%, NYK managed to obtain waiver from the Securities Commission not to make a general offer to acquire the rest of Tasco's shares. For more details on the transaction, go here.

Nippon Yusen Kabushiki Kaisha (translated as Japan Mail Shipping Line), is one of the largest shipping companies in the world.

Recent Financial Results

For 4Q2008, Tasco's net profit dropped 24.2% q-o-q to RM3.8 million on the back of a 10.1%- drop in turnover to RM94 million. Compared to the same quarter last year, Net profit was unchanged while turnover inched up by 6.8%.



Past Financial Results

Tasco's track record has been very impressive. Its net profit rose from RM10.0 million in FY2005 to RM14.9 million for FY2008, while turnover increased from RM288 million to RM367 million during the same periods.



Financial Position

Tasco's financial position is very healthy. Current ratio stood at 1.75 times as at 31/12/2008. At the same time, its borrowings (comprising HP & leasing commitment) stood at RM6 million as compared to Shareholders' Funds of RM174 million. In addition, its cash in hands (including FDs) stood at RM46 million.

Valuation

Tasco (closed at RM0.615 yesterday) is now trading at a trailing PE of 4 times. If we excluded the 46 sen cash-holding, we would be buying Tasco at RM0.155 only, or at slightly over 1-time PE. It's a steal!

Technical Outlook

The stock has been sliding off since its listing. It has pretty good support at RM0.55-60. The share price had a short, sharp rally in the past few days on hope that a general offer will be imminent. Since a waiver has been obtained, the share price has now retreated back to the base again. It must be noted that Tasco is an inactive stock, which may not be suitable for those with short time horizon.


Chart 1: Tasco's daily chart as at 31/3/2009 (Source: Quickcharts)

Conclusion

Based on cheap valuation, Tasco is a good buy for long-term investment.