PETALING JAYA: Analysts remain neutral on the seaports and logistics sector, with their top pick being Westports Holdings Bhd
for its resilient earnings, underpinned by long-term contracts.
Kenanga Research said that Westports would be able to weather the challenging global trade outlook by being a key beneficiary of trade diversion, while effectively managing its yard congestion issues through a significant hike in container storage charges that would help it deal with vessel congestion due to tensions in the Middle East.
At last look, the stock was trading at RM5.46. It noted that the domestic logistics sector fared better in the third quarter as Malaysia’s total trade moderated to 3.8% as of August versus last year’s growth of 9.2% and trade surplus of RM86.1bil as of August 2024.
This was especially visible in the domestically driven third-party logistics sector thanks to the trend of onshoring among businesses, which is less vulnerable to external headwinds as it is buoyed by a boom in eCommerce.
Kenanga Research said industry experts project local eCommerce gross merchandise volume to grow at a compounded annual growth rate of 7% from 2023 to 2027, reaching RM1.9 trillion by 2027 from RM1.4 trillion in 2023.
“Local companies, however, face intense competition from Chinese competitors, which constrains the ability of local companies to fully leverage Malaysia’s strong total trade growth.” It noted this situation is due to the irrational pricing set by Chinese logistics players despite rising operating costs for (manpower and stricter weight limit regulations).
