Kenanga Research said the booming eCommerce will spur demand for distribution hubs and warehouses. — Bloomberg
PETALING JAYA: The logistics sector is expected to perform better riding on the eCommerce boom.
“We see a bright spot in the domestically-driven third-party logistics (3PL) sector, which is less vulnerable to external headwinds being buoyed by the booming eCommerce,” Kenanga Research said in a report.
It pointed out that industry experts had projected the local eCommerce gross merchandise volume to grow at a compound annual growth rate of 7% from 2023 to 2027, with size reaching RM1.9 trillion by 2027 from RM1.4 trillion in 2023.
The research house said the booming eCommerce will spur demand for distribution hubs and warehouses to enable just-in-time delivery and reshoring and nearshoring to bring manufacturers closer to end-customers.
It added that the boom will also bring about a more efficient automation system including interconnectivity with the customer system as well as warehouse decentralisation exercise to reduce transportation costs and de-risk the supply chain.
“There is also strong demand for cold-storage warehouses on the back of the proliferation of online grocery startups.
“We maintain ‘neutral’ on the sector and do not have any top pick for the sector,” Kenanga Research said.
It said the sector’s earnings delivery (versus our expectations) improved sequentially in the recently concluded first quarter of this financial year (1Q24) results season with 25%, 50% and 25% beating, meeting and missing its forecasts, as opposed to 75% and 25% coming in within and below in the preceding quarter.
Among them, Bintulu Port Holdings Bhd
beat Kenanga’s expectation, while Westports Holdings Bhd and Pos Malaysia Bhd met our expectations but Swift Haulage Bhd disappointed.
The research house said Bintulu Port beat expectations with its core net profit doubling year-on-year driven by strong cargo volumes in both Bintulu Port due to the recovery in liquefied natural gas demand from China (which started in 4Q23).
Meanwhile, Westports saw a stronger top-line growth due to a stronger container volume with improved yields mainly from robust gateway container volume.
