Logistics players expected to remain resilient

PETALING JAYA: The outlook for trade remains uncertain due to potential changes in future tariff policies, global supply-chain disruptions and inflationary pressures and this will have an impact on the transportation sector, analysts say.

RHB Research said it remains optimistic about Malaysia’s trade performance this year as the country’s export-oriented industries are expected to benefit from some positive factors in the global economic outlook, such as the easing of global monetary conditions and steady economic growth in major economies.

The research house said regional seaport congestion has largely eased as shippers adapt to longer routes to avoid tensions in the Red Sea.

The research house added that there has also been no sign of an immediate return by shipping lines to the Suez Canal route while congestion faced by the Port of Singapore was seasonal due to the Lunar New Year and should be short-lived.

In logistics, the research house said freight rates had come off their highs, but this poses a short-term upside for the freight forwarders to secure better margins due to the lag in repricing, the research house added.

It kept its “neutral” sector weighting for ports, in line with its “neutral” call on the sector heavyweight, Westports Holdings Bhd.

It said this port operator is fairly valued, as Westports is currently trading at its historical mean.

Within the logistics sector, it remains positive about Tasco Bhd, which was its top pick due to its diversified client base and business segments, which help maintain its earnings stability.

Additionally, the government’s integrated logistics services-tax incentives provide a cushion against challenges within the sector.

The downside risks to its sector outlook include a continued slowdown in global economic growth, which could paralyse trade flows, and a further weakening of freight rates.

RHB Research added that Westports posted core net profit of RM266mil for the fourth quarter of last year (4Q24), bringing earnings for the full year (FY24) to RM902mil.

This was 106% of RHB Research’s forecast for the year and 108% of consensus forecasts.

The positive deviation was mainly from lower-than-expected operating expenses and higher-than-expected rental revenue.

Following the results, RHB Research lifted its FY25 to FY26 earnings by 7% to 8% to include upward adjustments on rental revenue estimates and lower operating expenses.

FM Global Logistics Holdings Bhd reported core profit of RM9.1mil its 2Q25, bringing its core earnings to RM16.1mil for the first half of its FY25 (1H25).

The earnings were in line with RHB Research’s full-year forecast as it expects FM Global Logistics to chalk up a better 2H25 performance.

The research house kept its earnings forecasts for the company unchanged as the results were in line with its expectations.

Tasco’s 3Q25 earnings fell to RM9.1mil, bringing its core earnings for the first nine months of its FY25 to RM34mil, below expectations at 55% of full-year estimates.

The shortfall stemmed from weaker contributions in freight forwarding and contract logistics.

Following the results, RHB Research cut its FY25 to FY27 earnings forecasts for Tasco by 14%, 12% and 10%, respectively, reflecting lower revenue growth and margin assumptions amid slower volume recovery.