AmInvest ‘Overweight’ on transportation and logistics sector


AMINVESTMENT Bank Bhd (AmInvest) upgraded the transportation and logistics sector to ‘Overweight’ from ‘Neutral’ as the seaport segment will continue to be buoyed by the recovery in global trade.

The research house said the air travel industry has also finally seen the light at the end of the tunnel with vaccination programmes underway worldwide.

“Meanwhile, the logistics segment will continue to ride on e-commerce during and beyond the pandemic,” it said in a note yesterday.

For ports, the research house said the segment has bounced back and is poised to do even better in 2021 due to a diversion of investments from China to the SouthEast Asian region, thus boosting container throughput in the region.

“The pandemic, as well as trade tensions between major economies in the world prior to the pandemic are reshaping the global supply chain, resulting in the diversion to this region.

“The container throughput growth in the region is also supported by fast-growing sectors, such as communication equipment, semiconductors, and textile and apparel, as we are home to many suppliers for the industries in this region,” it said.

AmInvest forecasts container throughput at both Westports and the ports of MMC Corp Bhd to grow by 3% this year, after contracting by an estimated 1% to 2% in 2020, and said it would return to pre-pandemic growth levels of between 3% and 5% in 2022.

Meanwhile, citing the International Air Transport Association, the research house said passenger volume would not return to 2019 levels until 2024, with domestic markets recovering faster than international services.

“On a brighter note, it is assuming that borders will start reopening by mid-2021, with testing and the growing availability of vaccines,” said AmInvest.

For logistics, the parcel delivery segment will continue to be the winner post-pandemic as we believe consumers have permanently shifted their shopping habits from physical stores to on-line channels, lifting the growth path for parcel volume to another new level.

“We believe that logistics players will continue to focus on improving their service and operational efficiencies to improve margins and gain market share, which are critical for the players to continue to strengthen their market position and stay relevant within the industry, and eventually benefit from the e-commerce boom,” it said.

AmInvest’s top picks within the logistics sector are MMC Corp and Westports Holdings Bhd as the research house anticipates a recovery in container throughput in the next six to 12 months.

“We may downgrade the sector to ‘Neutral’ or ‘Underweight’ if the container throughput volume comes in weaker than expected, air travel demand recovery is slower than expected, or the parcel volume comes in lower than expected,” added AmInvest.