Second half of year to augur well for Bintulu Port

Kenanga Research considers Bintulu Port’s results within expectations as it expect a stronger 2H on higher LNG shipments ahead of the winter months.

KUCHING (Aug 28): Analysts remain positive on Bintulu Port Holdings Bhd’s (Bintulu Port) operations moving into the second half of the year (2HFY23) despite its 1HFY23 results coming in at only 43 per cent of the full-year consensus estimate.

Researchers at Kenanga Investment Bank Bhd (Kenanga Research) consider Bintulu Port’s results within expectations as it expects a stronger 2H on higher liquefied natural gas (LNG) shipments ahead of the winter months.

“We acknowledge that the challenges in China’s economy at present will have a bearing on the demand for aluminium and manganese,” it said in its review today.

“Consequentially, the inbound and outbound cargo volumes from Samalaju Industrial Port key customers – Press Metal Aluminium Holdings BHd and OM Holdings Ltd — may not pick up significantly over the immediate term.

“However, we believe its key customers have an edge over their peers in the international market as their products have low-carbon footprint given the hydro power input.

“Also, as it stands today, Western countries still have outstanding sanctions on Russian aluminium (that makes up circa six per cent of world aluminium production) and hence will have to look for alternative sources of aluminium supply.”

Kenanga Research continued to like Bintulu Port for its steady income stream from handling LNG cargoes for Malaysia LNG Sdn Bhd; it could potentially enjoy a step-up in earnings if Bintulu Port is granted a significant hike in its port tariffs; and the tremendous growth potential of Samalaju Industrial Port backed by rising investment in heavy industries in Samalaju Industrial Park.

A similar sentiment was shared by AmInvestment Bank Bhd (AmInvestment Bank), who was optimistic on Bintulu Port’s long-term outlook due to LNG demand expected to remain strong as Europe aims to reduce dependency on Russian gas.

“Bintulu Port is also expected to see expansion of its LNG operation by Petronas through a third floating LNG vessel nearshored in Sabah by 2027; as well as troughput growth envisaged to be underpinned by Samalaju Industrial Port and new industries such as sulphur.

“We also like BiPort for its consistent dividend payout of 50 per cent.”

It noted that Bintulu Port’s concession expired on December 31, 2022 with the option to extend for another 30 years until 2052.

The extension has been approved in principle, and BiPort as well as Bintulu Port Authority are in the midst of finalising the terms and conditions for the new
concession agreement.

An interim agreement was signed on November 24, 2022 to continue operating Bintulu Port for an interim period of six months from January 1, 2023 onwards. The interim period has since been extended by 12 months from July 1, 2023, with further extension of 6 months in the event the new privatisation agreement has yet to be finalised and executed.

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