IJM is targetting a throughput of 35 million freight weight tonnes (fwt) in three years versus the peak of 26.8 million fwt in FY20.
PETALING JAYA: The volume of cargo at IJM Corp Bhd
’s port division is expected to come in slightly better in the second half of the financial year 2023 (FY23).
This is partially based on falling shipping rates which are likely to improve the economics of lower value cargo, and should be further aided by a slight uptick in mining shipments.
Hong Leong Investment Bank (HLIB) Research, which hosted a meeting with IJM recently, said Kuantan Port is due for a tariff hike this year, although no quantum was shared.
According to HLIB Research, in the past year, Malaysia has seen tariff hikes of 30% and 15% at Pasir Gudang Port and the Port of Tanjung Pelepas, respectively. However, it has not factored this in as prevailing economic uncertainties could often lead to implementation delays.
On a longer term basis, it said prospects are solid, with Malaysia-China Kuantan International Logistics Park (MCKIP) 1 and 2 fully taken up and MCKIP 3 (comprising 640 acres) undergoing the approval process for further development.
“Buoyed by the expansion of Alliance Steel (M) Sdn Bhd and investments from Jianhui Paper and Bosai Group (US$2.5bil or RM11.9bil), IJM is targetting a throughput of 35 million freight weight tonnes (fwt) in three years versus the peak of 26.8 million fwt in FY20.
“As such, the company is in the midst of contemplating a containerised cargo versus bulk cargo design for Phase 2,” HLIB Research pointed out in its report.
HLIB Research also sees improving fundamentals at the group’s construction segments, while its industry division remains strong.
“To the contrary, its property operations could face selective sales weakness moving forward.
“We believe changes to toll concession terms would be discounted cash flow-neutral and could bring stake-unlocking and alignment extension opportunities,” HLIB Research said.
