Bintulu Port Holdings Bhd (BPHB) is expected to maintain profit growth thanks to its liquefied natural gas (LNG) business, the profits of its subsidiary – Samalaju Industrial Port Sdn Bhd – and its crude palm oil bundling services (CPO) in Sarawak.
Kenanga Research said the ocean cargo-handling company’s profits are underpinned by a long-term PETRONAS supply contract and backing from industrial investors.
It was also noted that the group has government-linked shareholding support as an interconnected port operator.
In a report yesterday, Kenanga said the group was looking to diversify its customer base to reduce its dependence on the LNG business without further capacity expansion plans.
“The core business of the group will still be led by the LNG business (49% of group revenue), with future growth coming from the industrial port of Samalaju (20%), and the balance driven by various cargoes and non-LNG containers and CPO consolidation. services (6%),” he said.
As part of its LNG segment, BPHB’s three plants which have an 80% utilization rate now have a total capacity of 29.3 million tonnes.
This is fueled by long-term contracts from PETRONAS over a period of 20 years.
“The contracts provided for the supply of LNG to Taiwanese, Japanese and South Korean utility companies. PETRONAS is expanding through an alternative distribution channel using ISO LNG tanks through a partnership with Tiger Gas Group (China),” Kenanga said.
The industrial port of Samalaju is expected to break even by 2025, with its growth driven by an influx of investment.
In addition to its six existing investors, the group has welcomed a new investor, Wenan Steel (M) Sdn Bhd, which is set to become a major steelmaker in the Asean region.
“Additionally, the industrial port of Samalaju has an unused RM1bil in investment tax allowance which could reduce its effective tax rate and further increase its revenue beyond the current level,” Kenanga said.
Beyond this, BPHB is also banking on bundling services from Sarawak’s palm oil industry to boost its growth.
Kenanga Research has a “buy” call with an “outperform” rating on BPHB with a target price of RM5.95, almost 13% higher than the counter market price of RM5.20.
Source: The Star