Bintulu Port Holdings Bhd's (Bintulu Port) operations are expected to perform better in the second half of the year, according to analysts, despite its first-half results falling short of the full-year consensus estimate. Kenanga Research believes that the results are in line with expectations and hopes for a stronger second half due to higher liquefied natural gas (LNG) shipments ahead of the winter months.
However, the ongoing economic challenges in China may lead to lower demand for aluminium and manganese, which could affect inbound and outbound cargo volumes from Samalaju Industrial Port's key customers. Nevertheless, Kenanga Research believes that Bintulu Port's key customers have an edge over their peers in the international market due to their products' low-carbon footprint.
Furthermore, the Western countries' unwillingness to buy Russian aluminium could potentially lead to a search for alternative sources of aluminium supply, which may benefit Bintulu Port's operations.
Kenanga Research and AmInvestment Bank remain positive on Bintulu Port's long-term outlook due to its steady income stream from handling LNG cargoes for Malaysia LNG Sdn Bhd, which could potentially enjoy a step-up in earnings if Bintulu Port is granted a significant hike in its port tariffs. Moreover, the tremendous growth potential of Samalaju Industrial Port, backed by rising investment in heavy industries in Samalaju Industrial Park, is another factor that makes Bintulu Port an attractive investment.
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, which has since been extended by 12 months from July 1, 2023. Further extension of six months may occur in the event of a delay in finalising and executing the new privatisation agreement.
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