THE quarter three 2024 (3Q24) sector results generally met estimates, with one stock under coverage posting in-line numbers, one exceeding expectations, and two falling below estimates.
“Maintain sector neutral, in line with similar calls on heavyweights like Malaysia Airports (MAHB) and Westports,” said RHB in the Malaysia Sector Update Report.
RHB’s economists remain positive on 2025 global demand, forecasting above-consensus GDP growth of 2% and 4.8% for the US and China.
However, they are cautious about potential trade impacts from US protectionist policies. RHB believes 2025 will be another year of growth for Malaysia’s air passenger movements, which are expected to surpass pre pandemic levels in 2025.
This is supported by visa-free travel for Chinese tourists, e-Gate immigration, and airport expansions in Subang, Penang, and Kota Kinabalu.
Regional seaport congestion has eased as shippers adapt to longer routes amid Yemeni Houthi rebel attacks on vessels using the Red Sea and Gulf of Aden.
In logistics, DHL anticipates elevated freight rates due to potential US port strikes, tariffs, and prolonged Red Sea diversions.
RHB maintains their sector neutral weighting, given similar calls on heavyweights like MAHB and Westports.
They think these infrastructure players are fairly valued, as the latter’s share price has risen to 32% to its peak this year while the former’s privatisation is progressing.
“Within the logistics sector, we remain positive on TASCO, our top pick, due to its diversified client base and business segments, which help maintain earnings stability,” said RHB.
Additionally, the integrated logistics services or ILS tax incentives provide a cushion against challenges within the sector.
Downside risks include a continued slowdown in global economic growth, which will paralyse trade flows, and a further weakening of freight rates. The opposite represents the upside risks. —Dec 27, 2024
Main image: Aviation Nuggets
