Logistic Related Stocks Initial Coverage I

According to the LOGISTICS AND TRADE FACILITATION MASTERPLAN (2015-2020) (Read more here) by Malaysia Economic Planning Unit (EPU), the performance of the logistics sector in 2014 is summarised below:

• 98.5% of cargo volume was handled by sea, the balance is transported by rail and air;
• Port Klang accounted for the largest share of sea cargo throughput in Malaysia, handling 200.3million tonnes or 40% of cargo volume, of which 63% is container transhipment;
• Port Klang ranked number 12 in the world and Tanjung Pelepas Port (PTP) ranked 19;
• Kuala Lumpur International Airport (KLIA) contributed 77% of cargo volume, followed by Penang Airport with 12%;
• Padang Besar Terminal handled approximately 34% of rail cargo volume from South Thailand for export through Penang Port;
• Number of goods vehicles on the road in the country exceeded one million. 65% were small commercial vehicles of less than 5 tonnes.

Between 2009 and 2013, Malaysia recorded an annual growth of:

• 6.9% for sea freight volume
• Malaysia has world class international seaports and container hubs, such as Port Klang, PTP and other regional ports.

• 6.8% for road freight volume
• Road freight played a pivotal role in the domestic distribution of freight and last-mile connectivity to seaports, airports and rail stations.

• 6.1% for rail freight volume
• Rail freight was mainly contributed by cargo volumes from Southern Thailand which are exported through Penang Port and Port Klang. The growth is expected to increase further with the full operation of the double track project between Ipoh and Padang Besar.

In November 2016, Malaysia and China inked 14 business-to-business agreements and 16 government-to-government Memorandum of Understandings amounting to approximately RM144 billion. Among the key deals inked was East Coast Rail Line (“ECRL”) infrastructure project amounting to RM55 billion and Malaysia’s acquisition of four Chinese littoral mission ships.  This is part of the development of One Belt One Road (OBOR) initiative by China to enhance the connectivity between China, Asia and Europe (Read more here).

Meanwhile, the introduction of National E-Commerce Strategic Road Map (Read more here), together with the Digital Free Trade Zone (DFTZ) initiative (Read more here), will boost the demand for logistic service.  According to the road map, Malaysian E-Commerce is projected to grow at 11% CAGR to year 2020 (see following table).  Thus, the growth prospect for Malaysia logistic sector is encouraging.

Malaysia logistics and freight management market are very fragmented, comprises of small private operators and large private or listed companies.  There are many companies listed on Bursa Malaysia that involve in logistic, port and freight management business, below are some of the them in alphabetical order:

Company	Main Business
Ancom Logistics	Chemical related product logistic service
Century Logistics	Integrated total logistics services
Complete Logistic	Integrated total logistics services
DKSH	Warehousing & distribution (48% of total group revenue)
Freight Management	Integrated total logistics services
Harbour-Link	Freight forwarding, transportation and distribution
GDEx	Express delivery service
Hubline	Dry bulk shipping
Integrated Logistics	Freight forwarding, transportation and distribution
Maybulk	Bulkers, tankers, ship brokerage
MISC	Energy shipping & maritime solution
Nationwide	Express delivery service
Pos Malaysia	Express delivery service
See Hup	General cargo freight forwarding
Tasco	Integrated total logistics services
Tiong Nam Logistics	Integrated total logistics services
Transocean	Freight forwarding, transportation and distribution
WestPort	Port operation
Yinson	Floating, Production, Storage and Offloading (FPSO) service providers

 

From the above table, two main categories can be segregated based on their main business activity, namely “Integrated total logistics services” and “Express delivery service”.  This study will only cover the stocks which fall under these two categories.

The “Integrated total logistics services” related stocks analysis will be covered in Part II of this series. 

Stay tuned!