Westports’ share price have risen 32% from the start of this year.
PETALING JAYA: Transportation stocks covered by RHB Investment Bank Bhd are being downgraded to “neutral” from “overweight” to reflect the research house expectations of the infrastructure components of the sector – namely airport operator Malaysia Airports Holdings Bhd
(MAHB) and seaport operator Westports Holdings Bhd.
RHB Investment Bank said, in a sector report, that Westports and MAHB were fairly valued, with Westports’ share price having risen 32% from the start of this year.
Meanwhile, MAHB’s share price has limited upside after the price gap reduced following the RM11 per share offer to take the company private by a consortium led by sovereign wealth fund and its largest shareholder, Khazanah Nasional Bhd.
As for the logistics components of the sector, the research house said Tasco Bhd, one of the largest cold-chain providers in the country, is its top pick with a “buy” call due to future prospects, supported by a diversified client base and business segments to sustain the company’s earnings and tax incentives or integrated logistics providers.
The research house said the recent second quarter of 2024 (2Q24) was good for MAHB, with the financial performance for the first-half surpassing its forecast after core profit rose 74% year-on-year.
This was aligned with ongoing air traffic recovery seeing a higher international passenger mix and resulting in higher passenger service charge and retail spending, it said.
“Malaysia’s air passenger movements reached 90% of pre-Covid-19 levels in 2Q24, while Turkiye has exceeded pre-pandemic levels by 19%.
“We believe Malaysia’s tourism is on track for a full recovery, aligned with our financial year 2024 (FY24) passenger forecast of 105.9 million compared to 105.2 million in 2019,” it added.
MAHB operates Istanbul Sabiha Gokcen International Airport in Turkiye.
The research house said Wesports’ 2Q core net profit’s 4.6% year-on-year rise, which brought earnings to RM408mil in the first-half, met its expectations.
“Although volume rose 0.7% year-on-year, 2Q container revenue grew 6.6% year-on-year due to higher value-added services contributions and increased storage units,” it said.
The research house pointed out that a total of 2.73 million twenty-foot equivalent units representing a 1% year-on-year increase was managed in 2Q, with transhipment and a gateway volume split of 56% and 44%.
It said “small-cap logistics players missed expectations despite elevated freight rates, mainly due to lag of repricing.”
Tasco’s 1Q25 core net profit of RM10.6mil, at 25% lower year-on-year, was 15% of full-year estimates as earnings were affected by weaker contract logistics and air freight forwarding segments on top of unfavourable foreign exchange movements, the research house added.
Meanwhile, FM Global Logistics Holdings Bhd, a logistics solutions provider, saw 4Q24 core earnings fall 6% year-on-year and full-year earnings down by 18% to RM32.6mil, mainly due to a lower-than-expected sea freight segment.
