Tasco stock rides the Covid-19 vaccine wave

AFTER staging a turnaround in its first financial quarter ended June 30, 2020 (1QFY2021), Tasco Bhd has seen its shares run up rapidly.

On Aug 26, the total logistics solutions provider reported a net profit of RM2.64 million in 1QFY2021 compared with a net loss of RM377,000 in the previous quarter. On a year-on-year basis, its net profit doubled from RM1.28 million a year ago, even as revenue slipped 2% to RM178.57 million.

Since then, Tasco’s share price has gained 71% to close at RM1.45 last Thursday, giving the company a market capitalisation of RM290 million. It added RM120 million in market value in that time.

While the run-up in the stock has been attributed in part to the strong 1QFY2021 financial results and other encouraging signs from the company, a market observer points out that it has been amplified by some investors who have been betting that total logistics solutions providers like Tasco will benefit from the delivery of any future Covid-19 vaccine, which requires cold-chain facilities.

“The market euphoria surrounding rubber glove and pharmaceutical stocks seems to have spread to cover cold-chain logistics companies as investors scramble to find the next big thing that would benefit from a Covid-19 vaccine breakthrough,” the market observer tells The Edge.

The run-up in the group’s share price has outpaced the earlier predictions of even the most-bullish analysts. Last Friday, MIDF Research revised its target price to RM1.32 from 80 sen previously, but it is still 9.8% lower than the counter’s Thursday close of RM1.45. The research firm is maintaining a “neutral” rating on Tasco as the current environment remains largely uncertain due to the Covid-19 pandemic.

JF Apex Securities analyst Lee Chung Cheng sees Tasco in a solid position to keep delivering positive results to meet his full-year estimate of RM15.5 million in net profit.