SEAPORT & LOGISTICS
[%lmnx%] [%EknD%] [%lbLO%] [%xzlz%] [%NyYB%]
Research by Kenanga
Neutral

“4QCY23 Report Card: Red Sea Raises Red Flag”

The sector’s earnings delivery (against our expectations) was more subdued sequentially in the recently concluded 4QCY23 results season. We downgrade our sector call to NEUTRAL from OVERWEIGHT as a prolonged war in the Middle East, particularly, the escalating Red Sea conflict of late, is weighing down on the Europe-Asian trade. The World Trade Organisation (WTO) said in end-Feb 2024 that it is cutting its current projection of a 3.3% growth in global merchandise trade volume in CY24, also quoting lower water levels in Panama Canal due to an extreme drought, which is disrupting the movement of shipping liners. We also acknowledge that global trade will have to navigate stricter regulations on carbon emissions. However, we continue to see a bright spot in the domestic logistics sector as it is: (i) driven internally and less directly exposed to external headwinds, and (ii) a beneficiary of the booming e-commerce. We do not have any stock picks for the sector.

Analyst(s):
Wan Mustaqim Bin Wan Ab Aziz
[%vVEf%]

SEAPORT & LOGISTICS
$KLSE-BIPORT $KLSE-POS $KLSE-SWIFT $KLSE-WPRTS $KLSE-PMETAL
Research by Kenanga
Neutral

“4QCY23 Report Card: Red Sea Raises Red Flag”

The sector’s earnings delivery (against our expectations) was more subdued sequentially in the recently concluded 4QCY23 results season. We downgrade our sector call to NEUTRAL from OVERWEIGHT as a prolonged war in the Middle East, particularly, the escalating Red Sea conflict of late, is weighing down on the Europe-Asian trade. The World Trade Organisation (WTO) said in end-Feb 2024 that it is cutting its current projection of a 3.3% growth in global merchandise trade volume in CY24, also quoting lower water levels in Panama Canal due to an extreme drought, which is disrupting the movement of shipping liners. We also acknowledge that global trade will have to navigate stricter regulations on carbon emissions. However, we continue to see a bright spot in the domestic logistics sector as it is: (i) driven internally and less directly exposed to external headwinds, and (ii) a beneficiary of the booming e-commerce. We do not have any stock picks for the sector.

Analyst(s):
Wan Mustaqim Bin Wan Ab Aziz
wanmustaqim@kenanga.com.my

$BIPORT / 5032 (BINTULU PORT HOLDINGS BERHAD)

$WPRTS / 5246 (WESTPORTS HOLDINGS BERHAD)

$PMETAL / 8869 (PRESS METAL ALUMINIUM HOLDINGS BERHAD)