KUALA LUMPUR (Sept 4): Kenanga Research has raised its earnings forecasts for Bintulu Port Holdings Bhd (KL:BIPORT) by 10% for both the financial year ending Dec 31, 2024 (FY2024) and FY2025, citing a more positive outlook driven by expected stability in liquefied natural gas (LNG) gas supply and promising developments in port tariffs.
"We have factored in a 10% hike in Bintulu Port's tariffs in FY2025 net profit (as well as higher concession lease payment for the longer concession period), with tariff hikes of up to 40% in total to be staggered over a 30-year concession period (in our discounted cash flow valuation)," the house added.
In a note on Wednesday, Kenanga said recent insights from Bintulu Port’s results briefing for the second quarter ended June 30, 2024 (2QFY2024) highlighted a stronger second half (2HFY2024), following recent operational disruptions.
“Furthermore, it expects a stronger contribution from the base support facilities segment's revenue from the Jerun gas field and Rosemary-Marjoram's onshore plant,” the house said.
The research house maintained its ‘market perform’ call on Bintulu Port, with a revised target price adjusted up by 4% to RM6.55.
Although previous results were impacted by an unplanned shutdown and scheduled maintenance, Kenanga said that these issues are anticipated to be resolved, improving future performance.
Besides, the formation of the Bintulu Port Authority Sarawak (BPAS), under the Sarawak government, is set to complete by year end.
“The setting up of the BPAS, which is under the purview of the Sarawak government, is on track to be completed by year end, paving the way for a new concession in January 2025, and a 10% hike in Bintulu Port’s tariffs by FY2025, based on our predictions,” the house added.
Currently, Bintulu Port’s tariffs are considerably lower than those at the Samalaju Industrial Port, making the tariff adjustment a significant advancement.
The company also aims to generate 10% of its revenue from handling green energy by 2028, driven by hydrogen projects in Bintulu. This shift towards green energy, along with the handling of construction materials for these projects, is said to contribute to revenue growth.
At the time of writing on Wednesday, Bintulu Port’s share price was unchanged at RM6.20, giving the company a market capitalisation of RM2.85 billion.