PETALING JAYA: Malaysia’s transportation sector is set to face a more challenging cost environment in 2026, as higher fuel prices and geopolitical tensions reshape earnings across air, sea and land operators.
BIMB Research expects stable near-term results but shifting focus.
In its report, the brokerage wrote: “We expect the first-quarter of financial year 2026 (1Q26) results to broadly meet expectations, with investor focus shifting to forward guidance as the full impact of Middle East tensions materialises from 2Q26.”
Latest Statistics Department data showed transport inflation picked up in March, particularly for air and commercial transport, and this is likely to intensify in April, with crude oil prices currently hovering around US$100-US$110 per barrel versus BIMB Research’s original 2026 assumption of US$65 per barrel.
The brokerage has since revised its assumption to US$95 per barrel.
“We believe management teams will give more cautious guidance and their plans to mitigate and rationalise cost spikes,” BIMB Research said about companies in the sector.
Air transport remains the most exposed segment due to reliance on spot jet fuel procurement, prompting airlines to implement fare hikes, capacity rationalisation and route optimisation, it observed, citing official data that showed March air transport inflation rising 16% year-on-year.
Sea transport is comparatively resilient, underpinned by long-term contracts and steady domestic demand, although BIMB Research flags second-order risks including softer throughput and geopolitical disruptions to shipping lanes.
Westports Holdings Bhd
, for instance, faces exposure where fuel accounts for around 16% to 17% of operating costs, alongside potential volatility in vessel flows linked to Strait of Hormuz developments.
Land transport presents a mixed picture, where subsidy frameworks and margin-guarantee contracts provide support for operators such as Perak Transit Bhd and HI Mobility Bhd, while logistics player Swift Haulage Bhd benefits from fuel pass-through structures, although it may still experience margin compression as the group prioritises volume stability.
Overall, BIMB Research maintains an “overweight” stance on the transportation sector, stressing selective opportunities.
“We prefer operators with fuel cost pass-through mechanisms, ensuring sustainable return on invested capital and free cash flow. We are cautious on companies with highly levered balance sheets as financing will be challenging to obtain and expensive due to the elevated industry risk,” it said.
It recommends selective exposure to MTT Shipping and Logistics Bhd (target price: RM1.25) and Shin Yang Group Bhd (non-rated) for its defensive dividends.
Perak Transit (target price: 62 sen) and HI Mobility (target price: RM3.14) are both deep value “buys”.
The research house is “neutral” on Westports (target price: RM5.70) and Swift Haulage (target price: 43 sen).
