Kenanga Research raised Bintulu Port’s FY24 and FY25 net profit forecasts by 10%.
PETALING JAYA: Kenanga Research is upbeat about the strong prospects of port tariff hikes by Bintulu Port Holdings Bhd
, following the setting up of Bintulu Port Authority Sarawak (BPAS) by the Sarawak government.
The research house said: “BPAS is on track to be completed by year-end, paving the way for a new concession in January 2025 and a 10% hike in Bintulu Port’s tariffs by financial year 2025 (FY25), based on our forecasts.”
There has not been any revision to Bintulu Port’s tariffs since 1993 and its tariff is 38% lower than that of Samalaju Industrial Port, Kenanga Research said in a report yesterday.
Bintulu Port currently charges RM207.50 per twenty-foot equivalent unit (TEU) for local containers, versus RM335 per TEU charged by Samalaju Industrial Port.
One of the key takeaways from the group’s recent second quarter financial year 2024 (2Q24) results briefing included Bintulu Port expecting stable supplies of liquified natural gas (LNG) in the second half of 2024 to cater for strong demand during winter season upon commissioning of the Jerun gas field and Kasawari gas development project.
In addition, Bintulu Port has set a target of 10% of total revenue coming from the handling of green energy by 2028, with the balance from LNG (40%) and non-LNG (50%). At present, the group’s revenue mix is evenly split between LNG and non-LNG.
Sarawak’s investment in two large-scale hydrogen plants in Bintulu – H2biscus and H2ornbill – pursuant to its hydrogen-economy initiative, will produce green-energy cargoes for Bintulu Port, such as green hydrocarbons, ammonia and methanol, as well as blue ammonia.
Earlier this year, Sarawak Premier Tan Sri Abang Johari Openg announced the state’s commitment to working with domestic and international partners to spearhead the energy transition.
He stressed that the Sarawak Hydrogen Roadmap will guide the state government’s efforts, covering technological advancements, infrastructure development, and regulatory frameworks.
Bintulu Port will also handle biomass fuels produced in the hinterland, Kenanga Research said, adding that it will benefit from the handling of construction materials for the hydrogen plants.
The research house noted: “We continue to like Bintulu Port for its steady income stream from handling LNG cargoes for Malaysia LNG Sdn Bhd that typically makes up close to 50% of its total profit.
“Also, a potential improvement in earnings will emerge if Bintulu Port is granted a significant hike in its port tariffs. This will also be supported by the tremendous growth potential of Samalaju Industrial Port backed by rising investment in heavy industries in Samalaju Industrial Park,” the research house said.
Kenanga Research raised Bintulu Port’s FY24 and FY25 net profit forecasts by 10% on the assumption of a stable LNG gas supply from the Jerun gas field and Kasawari gas development project.
“We had factored in a 10% tariff hike for Bintulu Port’s FY25 net profit as well as higher concession lease payments for the longer concession period, with tariff hikes of up to 40% in total to be staggered over a 30-year concession period,” the research house added.
The research house, which kept a “market perform” call on the stock, also lifted its target price by 4% to RM6.55 from RM6.30 previously.
The risks to its call include the port’s inability to secure an adequate port tariff hike to offset escalating operating costs and a global recession hurting heavy industries in Samalaju Industrial Park.
