PETALING JAYA: Logistics and port management companies are on track to post robust earnings on the strong recovery of Malaysia’s trade performance, according to RHB Research.
In its report, the brokerage maintained a “positive” view on the country’s trade outlook for 2024, buoyed by the resilience of the global and regional economies, the global technology cycle rebound, and China’s positive economic dynamics.
It noted that in January, Malaysia posted exports and imports growth of 8.7% and 18.8% respectively had exceeded market consensus estimates of 3% and 8%.
“We expect this to benefit Westports Holdings Bhd
and logistic players like Tasco Bhd and FM Global Logistics Holdings Bhd,” RHB Research said.
Tasco was one of the brokerage’s top two picks for the transportation sector. The other was Malaysia Airports Holdings Bhd (MAHB).
“We like MAHB as an evident recovery play, and our preference for Tasco within the logistics sector is premised on its diversified client base and business segments that will sustain earnings base, and the Integrated Logistics Services tax incentives that offer a buffer against sector headwinds,” RHB Research explained.
Of the four companies under its coverage for the transportation sector, the brokerage said Westports exceeded expectations, MAHB came in line, while FM Global and Tasco fell below estimates at the recently concluded result season.
Westports ended the year with historical high volumes, signalling a recovery in regional trade activities.
The container throughput exceeded initial guidance of low single-digit growth, due to empty boxes repositioning in the first half of 2023 and stronger gateway 20-foot equivalent units in the second half of 2023, especially in December.
As for MAHB, RHB Research said the company exhibited recovery momentum in both aeronautical and nonaeronautical segments.“We anticipate the resolution of aeronautical charges would inject new growth catalysts for MAHB’s earnings visibility going forward,” it said.
Although results of logistics players disappointed, RHB Research said recovery was in sight this year.
For Tasco, it said the company was expected to book stronger numbers ahead, supported by recovery in trade activities, sector tailwinds, contributions from new warehouses, and recognition of tax incentives.
The research house has recommended “buy” for Tasco and MAHB, with target prices of RM1.19 for Tasco and RM9.48 for MAHB.
It was “neutral” on Westports and FM Global, ascribing target prices of RM4.12 for Westports and 64 sen for FM Global.
