RHB Research maintains neutral call on transport sector

KUALA LUMPUR:  RHB Investment Bank Bhd (RHB) Research has kept a neutral call on the transportation sector after the June-end quarter results for the sectorcame in line with the firm's expectations except for GDEX Bhd.

"Despite the prolonged weakness in trade flows and soft Malaysia trade data for 2Q23, FM Global Logistics (FM), Westports Holdings, and TASCO chalked in-line earnings," it said in its note today.

GDEX's results missed the firm's expectation after it reported net loss of more than 50 per cent quarter-on-quarter (QoQ) and year-on-year (YoY) to RM11.9 million.

The firm noted that the challenges within the last-mile delivery space may continue with margins being under pressure due to ongoing price war, despite the softening of demands due to physical retail business resuming operations.

The research unit's top picks are Malaysia Airports Holdings Bhd (MAHB) and TASCO.

MAHB grew by 29.7 per cent quarter-on-quarter (QoQ) and more than 100 per cent YoY on the back of robust passenger traffic as well as further resumption of airline services for the quarter.

"We expect its revenue and earnings to catch up in 2H, in tandem with the peak travelling season especially in Turkiye and pick-up in the number of inbound tourists from China to support Malaysia's operation," it said. It has a RM8.70 target price for MAHB's share price.

"TASCO's 1QFY24 (Mar) earnings were only at 15 per cent  and 16 per cent of ours and Street's full-year forecasts, but we regard its performance as in line (1QFY24 was a seasonally weaker quarter)," it said.

The firm added that the slower-than-expected shipment volume growth is due to the lack of activities which was attributed to the country's weak trade data for 2Q23.

"We expect freight forwarding businesses to still see headwinds, as capacity (air cargo belly and ocean vessels) continues to grow while demand remains subdued," it said.

RHB Research has a RM1.70 target price for TASCO.

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