Diversification in place for Bintulu Port
09 Aug 2022
Bintulu Port Holdings Bhd (Bintulu Port) is looking to reduce reliance on its liquefied natural gas (LNG) business with no further capacity expansion as hinted by Petroleum Nasional Bhd (Petronas).
All in all, Bintulu Port’s core business will still be spearheaded by LNG business (49 per cent of the group revenue), with future growth to come from Samalaju Industrial Port (20 per cent of roup revenue), and the balance driven by various non-LNG cargo and container, as well as crude palm oil (CPO) bulking services (six per cent of revenue).
“There are currently three plants — MLNG 1, 2, and 3 with a total capacity of 29.3 million tonnes (currently at 80 per cent utilisation) driven by long-term Petronas contracts extending as far as 20 years for the supply of LNG to Taiwanese, Japanese and Korean utilities companies,” commented MIDF Amanah Investment Bank Bhd (MIDF Research) in an initiation report on the Sarawak port.
“Petronas is expanding through alternative distribution channel using LNG ISO Tanks (counted as two TEUs per tank) through partnership with Tiger Gas Group (China).”
Bintulu Port also benefits from Samalaju Industrial Park, whereby there are currently six investors including Sakura Ferroalloys, Malaysian Phosphate Additives, Pertama Ferroalloys, OM Holdings, Press Metal Bintulu and OCIM.
Recently, another huge investor came in, namely Wenan Steel (Malaysia) Sdn Bhd which is set to become a major steel manufacturer in the Asean region.
Going forward, MIDF Research believes these industries will help to drive Samalaju Industrial Port’s growth, with breakeven seen by 2025.
The research firm also said that Bintulu Port is banking on Sarawak’s palm oil sector.
“Under bulking services, Bintulu Port handles almost 95 per cent of Sarawak palm oil products with an integrated and connected terminal operated by Wilmar Group’s Bintulu Edible Oil, Sime Darby’s Austral Edible Oil, Sarawak Oil Palms’ SOP Edible Oil, Kirana Edible Oil and Borneo Edible Oil utilising all the 154,600 metric tonnes (MT) tank capacity at Biport Bulkers Sdn Bhd.
“Bintulu Port is currently in final discussion with the federal government to extend its concession agreement for another 30 years starting January 1, 2023 with a better lease term and tariff structure comparable to the industry rate.
“There has been no revision since 1993. Currently, Bintulu Port container tariff are significantly lower by 38 per cent compared to Samalaju Industrial Port.”
Following this, MIDF Research is projecting FY22 and FY23 earnings of RM112.3 million and RM141.5 million respectively, riding on long-term LNG supply contracts, resilient non-LNG cargo and container traffic as the biggest Sarawak port operator with strong volume growth driven by Samalaju Industrial Park (seven strongly-backed investors).
Furthermore, Samalaju Industrial Port have unutilised RM1 billion in Investment Tax Allowance (ITA) which could bring its effective tax rate lower and further grow its earnings beyond the current level.
“We initiate coverage (on Bintulu Port) with a target price of RM5.95 per share.”
Source: The Borneo Post