PETALING JAYA: Sea ports and dry bulk ship operators will continue to perform well for the rest of 2021, riding on the tailwind of the world’s economic recovery, according to research analysts.
In a report, MIDF Research said that Port of Tanjung Pelepas Sdn Bhd’ (PTP) (pic below) role as a transshipment hub will act as a cushion for other MMC Corp Bhd ports which rely heavily on gateway containers.
“Furthermore, with Maersk, the largest container ship operator in the world, owning a 30% stake in PTP, we believe that the shipping company will ensure that PTP will remain as its regional transshipment hub, ensuring sustainability of twenty-foot equivalent units’ (TEUs) volume,” said the research unit.
It noted that in the first half, MMC recorded a 10.4% year-on-year (y-o-y) increase in revenue to RM2.29bil while earnings soared 120.7% to RM298.5mil mainly due to higher volume handled at PTP and Northport (M) Bhd.
AmInvestment Bank Research also said seaport operators will continue to benefit from the growing containerised cargo movements worldwide.
The research unit pointed out that the seaport segment had already emerged from the pandemic since mid-2020 and stayed resilient, underpinned by strong demand for seaborne freight as reflected in the record Shanghai Containerise Freight Index (SCFI), a barometer of the containerised trade globally.
AmInvestment Bank Research said the ports’ improved performance was due to the recovery in demand for consumer and industrial goods, restocking activities by big retailers (such as Amazon and Walmart), and increased semiconductor production in response to the acute chip shortages worldwide.
The research unit also noted that in the first half, Westports Holdings Bhd’s container throughput volume increased by 11% y-o-y driven by growth in transshipment throughput volume, and an increase in gateway throughput due largely to strong exports of healthcare-related and consumer products.
“Looking beyond the pandemic, the outlook for the port sector in the region (Malaysia included) is resilient, underpinned by global trade and investments in the manufacturing sector that generate tremendous inbound (feedstock) and outbound (finished product) throughput for ports,” said the research unit.
AmInvestment Bank Research added that there had been significant relocations of the manufacturing base by multi-national companies out of China to the region due to the rising labour and land costs, exacerbated by the United States-China trade war.
“Westports has charted a long-term expansion plan to capitalise on these,” the report said.
AmInvestment Bank Research noted that Westports (pic above) had reiterated its guidance for a zero-to-mid single digit growth in its container throughput volume for 2021, as the group remained cautious on the second half due to supply chain disruptions fuelled by the pandemic.
“Already, it saw a single-digit decline in container throughput volume in July 2021,” said the research unit.
Meanwhile, Malaysian Bulk Carriers Bhd (Maybulk), which is the largest drybulk shipowner in the country engaged in international shipping, expects the dry bulk market to remain strong through the third quarter supported by the increase in infrastructure demand in key regions following the pandemic-related stimulus spending and a rebound in economic and industrial activity globally.
“Covid-related disruptions have led to congestion in ports particularly in China, and this has further tightened the supply of tonnage in the near term and supported freight rates,” said Maybulk in the release of its results for second quarter ended June 30, 2021.
Maybulk also noted that record high freight rates for containerised cargoes and a severe lack of ship capacity were forcing some shippers to turn to the dry bulk sectors.
“However, de-containerised volumes appeared to be slowing down with the supply chains able to adjust to accommodate longer lead times,” said the group, while opining that China’s economic risks were nevertheless growing with a combination of both slowing growth and inflationary pressures building.
Maybulk also opined that Chinese iron ore imports were likely to come under pressure towards year-end if steel output restrictions were imposed, and risks around China’s energy transition remained.
The group said freight rates were expected to remain volatile, as the impact of the Covid Delta variant was likely to weaken global demand particularly in China, and this set a more cautious backdrop to the final quarter of 2021 and into 2022.
It noted that the current strong dry bulk freight market had resulted in second-hand prices for dry bulk vessels to be close to historical highs.
“As compared to the end of last year, the price of a 10-year-old Supramax dry bulk vessel had increased by more than 75%,” said Maybulk, adding that the group had seized the opportunity to monetise such dry bulk assets by selling its MV Alam Madu and MV Alam Molek vessels for RM208mil, with the expected completion of the sales in the third quarter of 2021.
In the first half, Maybulk saw its net profit rising 34.7% y-o-y to RM47.1mil, while revenue rose 9.75% y-o-y to RM100.24mil.
The group said in the first half, the improvement in operating performance was mainly due to an 84% increase in charter rates, lower operating expenses from a smaller fleet size and redelivery of two loss-making chartered-in vessels.
Singapore-listed Hutchison Port Holdings Trust (HPHT) said the second half may see supply chain induced delays in moving containers through its facilities, while continued economic growth in the United States and Europe is expected to underpin demand in 2021.
HPHT has controlling interests in container port assets in two of the world’s busiest container port cities by throughput – Kwai Tsing, Hong Kong and Yantian Port (YICT), Shenzhen, China.
In its first-half financial results release, the world’s first publicly traded container port business trust noted that the first-half throughput at HPHT Kwai Tsing and YICT had benefitted from a global economic rebound from the Covid-19 downturn, particularly for outbound cargoes to the US and Europe.
“The increase in cargo volume occurred in an environment where global supply chains were severely disrupted and a partial shutdown of YICT in late May to early June to deal with several Covid-19 infections of stevedores,” said HPHT.
In a report, DBS Group Research noted that in the first half, HPHT saw net profit jumping 262% y-o-y to HK$768mil (RM408.44mil), while revenue rose 25% y-o-y to HK$6bil (RM3.19bil) on overall throughput growth of 13% y-o-y.
“We expect the core operating performance of the trust to remain solid as exports out of China should continue to remain steady in the second half of the year,” said the research unit.