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KUALA LUMPUR, April 19 —The seaport segment is poised to grow further in 2021 as the recovery in global trade gains further momentum, said AmInvestment Bank.
In a note today, the research house has maintained its overweight recommendation for the transportation and logistics sector, backed by the reopening of economies, businesses and borders, and the rollout of huge stimulus packages that will continue to support consumption investments.
"Meanwhile, over the immediate term, seaport operators will either face challenges or benefit from port congestion worldwide.
"There will be a slight negative impact on Westports Holdings Bhd (Westports), and we cut our full financial year 2021 forecast (FY21F) net profit (for the company) by two per cent as we now assume its throughput to grow at two per cent (versus three per cent previously)," it said.
Nonetheless, AmInvestment said it maintained its “buy” call on Westports.
"Being a transhipment port operator, Westport is not spared the loss of operational efficiency from the congestion. Nevertheless, we believe it is more prepared this time around, thanks to the experience gained during the similar situation at the height of the pandemic last year.
"During that time, Westports created additional yard space and imposed stricter storage charges to help ease the situation at the port," it said.
The research firm has also maintained its “buy” call on MMC Corporation Bhd (MMC Corp), increasing the company’s FY21F net profit by seven per cent on the assumption of a throughput growth of six per cent, raising its fair value by 11 per cent to RM1.68.
"The transhipment seaports under MMC Corp’s stable -- namely the Port of Tanjung Pelepas (PTP) and Northport that are largely secondary in the geographical area they serve and hence, less congested -- stand to gain from the diversion of port calls by shipping lines from busier primary ports.
"We believe Westports and PTP are poised to gain market share from the Port of Singapore (PSA) following PSA’s plans to raise its port charges in two phases from Jan 1, 2022, which will widen the gap in port charges between ports in Malaysia and Singapore," it added.
Looking beyond FY21F, AmInvestment believes that the port sector in the region, including Malaysia, will remain well-positioned to benefit from the shifting sourcing patterns, arising from the relocations of the manufacturing base by multi-national companies out of China to the region.