MORNING CALL: 8/9/23

TA Securities says cost pressures remain a concern for Tiong Nam Logistics Holdings.

Transcript

00:00 In focus today is Tiongnam Logistics.

00:04 TA Securities, which attended its analyst briefing, said it's keeping its sell recommendation

00:09 on the counter with a target price of 76 cent.

00:13 At closing bell yesterday, Tiongnam's shares stood at 75.5 cent apiece.

00:18 Some key takeaways according to TA.

00:20 Tiongnam saw increases in labour costs in the first quarter and labour shortage will

00:25 remain a thorny issue for the logistics and warehouse industry going forward.

00:30 The company will work on increasing warehouse automation and using other technologies to

00:34 mitigate the labour shortage problems.

00:37 Tiongnam does see a silver lining in its Senai Mega Warehouse, which is expected to prop

00:42 up earnings from the third quarter onwards.

00:45 To commence operations in mid-November, this new warehouse is expected to generate rental

00:50 income of about RM25 million per year, equivalent to 3.6% of total logistics and warehousing

00:56 revenue for FY23.

00:58 Tiongnam's property division will also help prop up earnings.

01:01 TA said the division should remain stable, underpinned by unbuilt sales of RM4.1 million,

01:07 RM76.7 million worth of completed properties held for sale and the new launch of shophouses

01:13 at Kota Masai.

01:15 The research house maintaining Tiongnam's sum-of-part valuation at 76 cent per share

01:20 said it's keeping its sell recommendation due to its current lofty valuation.

01:25 So what's the consensus?

01:26 According to Bloomberg data, TA is the only research house currently covering Tiongnam.

01:31 So to recap, that's one sell recommendation with a target price of 76 cent.

01:36 The counter last traded at 75.5 cent, which implies a potential downside of 0.7%.

01:42 Thanks for watching.