An aerial view of Bintulu Port.
PETALING JAYA: Tariff hikes remain in the spotlight as the takeover of Bintulu Port Holdings Bhd
by the Sarawak state government by year-end will raise the prospects for the hike implementation.
“We are optimistic about the long-awaited revision of Sabah’s port tariffs, which have remained unchanged for the past 35 years,” AmInvestment Bank Research said.
The Sabah state cabinet approved the tariff revision in principle in 2020 but it has yet to be implemented.
The research house said a bill to repeal Bintulu Port Authority Act 1981 was approved on July 17 and the next step is for the bill to be gazetted and enforced as law.
“The agreement is expected to be finalised by the end of 2024, coinciding with the expirations of the current two-year interim concession in December 2024.
“Hence, we assume the new concession will commence in January 2025 for a period of 30 years,” it added.
The research house has kept its “overweight” call on the port sector on the back of resilient Intra-Asian trade and incremental volume from Samalaju Port.
It was also optimistic that the port sector will be buoyed by stronger liquefied natural gas (LNG) demand in 2H24 as the northern hemisphere enters winter season and the prospective hike in tariffs.
“We reiterate our ‘buy’ calls on Bintulu Port with a fair value of RM7.30 and Suria Capital Holdings Bhd a fair value of RM2.55.”It pointed out that the port sector core net profit improved by 19% year-on-year (y-o-y) in the first half of the year. All three companies under its coverage registered positive core net profit growth y-o-y due to strong regional trade flows, driven by multinationals’ China+1 strategy, which led to more foreign investors setting up factories in South-East Asia.
It said Bintulu Port exceeded expectations while Westports Holdings Bhd and Suria Capital came in within expectations.
It explained that Bintulu Port’s outperformance was driven by resilient LNG demand, higher base support services and higher handling of manganese at Samalaju Port, which were reflected by a 12% y-o-y rise in its port revenue in 1H24.
As for Suria Capital, AmResearch said its wholly-owned subsidiary Sabah Ports’ collaboration agreement with DP World in April to jointly develop, manage, and operate Sepangar Bay Container Port (SBCP) augured well for Suria Capital.
SBCP is undergoing a large-scale expansion to substantively increase its annual handling capacity from 0.5 million twenty-foot equivalent units (TEUs) to 1.25 million TEUs by February 2025.
