During a recent call with Suria Capital Holdings Berhad, MIDF reported there were some highlights to take away especially on the port tariffs.
The board expects a broad-scale tariff revision since the state government had granted an initial approval for the review of port tariffs in CY20. However, implementation is still pending due to ongoing negotiations over the extent of the tariff increase. Notably, Suria might undergo a comprehensive revision, given that tariffs have remained unchanged for over three decades.
The house notes that both Suria and the Sabah Ports Authority have initiated discussions with port users regarding potential tariff increases. MIDF anticipates a rise in FY24F container volumes as SK Nexilis and Kibing Group’s new plants (operational since Oct-23) make gradual contributions. Kibing Group’s solar glass manufacturing plant has an annual production capacity of 440,000 tonnes/annum and is estimated to contribute up to 36,000 TEUs/annum to SBCP. Meanwhile, SK Nexilis’ twin plants are set to be the world’s largest individual copper foil facility with a combined production capacity of 57,000 tonnes/annum. The second plant is scheduled for completion in 2QFY24. The anticipated containerised export volume from
the plants is projected to reach 2,400 TEUs/annum.
The ongoing expansion of Sapangar Bay Container Port (SBCP), set to more than double its capacity to 1.25m TEUs/annum, might encounter a slight delay in achieving the initial 1QFY25 completion target due to challenges in sourcing materials for land reclamation. Recall that earlier this year, the state cabinet approved a strategic collaboration between Sabah Ports Sdn
Bhd and DP World, encompassing the management and operation of SBCP. Although details, including the equity structure, remain limited, discussions appear to be nearing completion. The collaboration holds the potential to attract major FDIs with plans to establish a free economic zone, logistics hub, and industrial parks.
The house maintains a neutral call on the stock and makes no adjustments to the earnings.
