Suria Capital Holdings Bhd’s (SURIA) long term prospects are expected to be supported by the on-going ports expansion plans, higher domestic and international tourists’ arrivals, and the commencement of the second phase of the Jesselton Quay project.
“We reckon that cargo volume, tonnage handled and containers of twenty-foot equivalent units (TEUs) will continue to be supported by gradual improvement in economic activities,” said Malacca Securities in the recent Stock Digest Report.
The research house believes that the port operation, particularly Sapangar Bay Container Port (SBCP) will ride on the relocation of manufacturing plants by multinational companies out of China to Southeast Asia as a result of the US-China trade diversion.
This is in line with SURIA’s objective in transformation into a key transhipment hub for the Brunei-Indonesia-Malaysia-Philippines East ASEAN region.
“Still, challenges remain, owing to the rising Malaysia palm oil inventory level for the third straight month in July 2023 to 1.7m tonnes as reported by the Malaysia Palm Oil Board,” said Malacca Securities.
Despite palm oil exports rising 15.6% MoM as demand has picked up ahead of the Deepavali festive season, the stronger supplies continue to keep inventory remaining at the higher end. Hence, we expect the ports operations segment which heavily relies on palm oil products may remain flattish.
SURIA has now commenced negotiation with the Sabah state government to extend the concession by another 30 years from 1st September 2034 to 31st August 2064.
This will reinforce their prospect of long-term income, whilst the prospects of overdue ports tariff revision will be another positive game changer for the group
“Despite that, we are ceasing coverage on SURIA due to reallocation of internal resources. Our last recommendation on SURIA was Hold with a fair value at RM1.20,” said Malacca Securities.
