KUALA LUMPUR (Jan 10): RHB Investment Bank Research has maintained its “neutral” rating on the transportation and logistics sector and said China’s reopening is a positive catalyst for the sector, driving throughput growth for both seaports and airports in 2H2023.

Nevertheless, in a note on Tuesday (Jan 10), the research house said hurdles that remain in its choppy execution would act as a near-term challenge, with the reopening likely to be gradual.

It said tepid global economic growth, underpinned by geopolitical tensions and persistent supply chain disruptions, may also lead to relatively soft global trade flows for the full year.

“So, we reiterate our partiality for diversified logistics player Tasco Bhd,” it said.

Commenting on Tasco, RHB IB said that the sustainable outstanding performance from the past few quarters has highlighted the importance of operational excellence and management’s strategy in defying investor expectations of a contraction in earnings due to the downtrending freight rate that has led to the share price underperformance YTD.

“The stock’s below-peer valuation of seven times presents a compelling investment proposition into the country’s leading integrated logistics player with consistent earnings delivery,” it said.

It said risks to the sector include a worse-than-expected resurgence of Covid-19 cases in China resulting in a longer-than-expected rolling lockdown.