KUALA LUMPUR: Tiong Nam Logistics Holdings Bhd's outlook beyond 2021 is bright backed by its logistics and warehousing segments that are expected to continue to deliver good performances in the quarters ahead, MIDF Research.
The firm said there was a more concentrated shift in the revenue and earnings mix for Tiong Nam this year, signifying growing reliance on its golden goose, the logistics and warehousing segment.
"Furthermore, we remain steadfast in our belief that the earnings from the logistics segment in the fourth quarter (Q4) financial year 2021 will bring back the group to profitability, outweighing the losses of other divisions," it said.
Meanwhile, MIDF Research said the nationwide vaccine immunisation drive that started at the end of February 2021, had lent a continued optimism to Tiong Nam's operational outlook.
With Malaysia and regional economies expected to stage a rebound, the robust performance of the logistics segment would be sustainable, it added.
"Our house forecast the Malaysian GDP to grow at 5.4 per cent in calendar year 2021 (CY21). In addition to sustainability of logistics, we posit that the poor performances of the property and hotel segments will not be repeated beyond financial year 2021 (FY21).
"We project that these two segments are able to at least reach up to 40 per cent of its pre-pandemic top line level with financial performances slated to rebound in the second half of financial year 2022," MIDF Research said.
The firm has made necessary adjustments to its earnings estimate forecast for Tiong Nam for FY21/FY22 from RM1.5 million/RM2.3 million to RM4.7 million/RM5.0 million as the quarter result highlighted the resiliency of the group's earnings.
MIDF Research remains upbeat on the long-term potential of Tiong Nam as it was one of the biggest logistic players in Malaysia with notable regional presence in comparison to its peers.
"We maintain 'buy' on Tiong Nam with an unchanged target price of RM0.93.
"However, we have to caution investors from exercising excessive optimism despite the positive outlook for the group as operationally it is still pandemic-laden and the company still has two loss-making divisions," it said.