Tanjung Pelepas Port has one advantage over Ports of Singapore: analyst

MMC Corp Bhd’s Tanjung Pelepas Port (PTP) has an advantage over Ports of Singapore, in terms of land availability, enabling a wider free zone to be setup.

MIDF Research said the development of the free zones could attract more multinational companies to shift their warehouse operations to PTP and eventually this will also include container volume.

It said out of the 3,500 acres of land covering PTP, around 1,000 acres had been allocated for the PTP Free Zone.

“The tenure of the lease agreement with companies setting up warehouses usually lasts for 30 years with an agreement to commit to a certain level of container throughput,” MIDF Research said in a note.

Latest occupants include the Volkswagen Regional Parts centre that commenced operations in October 2018, it added.

MIDF Research said PTP was at the final stages of getting the approval to expand into Phase 3 of the free zone with a size 168 acres.

In terms of published tariffs for transhipment cargo, MIDF Research said PTP offers competitive tariffs for transhipment cargo.

“Published transhipment tariffs are slightly higher than Port Klang but are around 40 per cent cheaper than PSA,” it said.

As such, the transhipment tariffs imposed at PTP strike a balance between its peers between price and efficiency, it added.

MIDF Research said MMC’s Johor Port Bhd (JPB) was working closely with authorities for around 30 per cent hike in tariffs at Johor Port.

“The last time tariffs were revised were in 2011 by only 10 per cent and was the first time a tariff revision took place since the inception of the port in 1977. Any revision in tariffs could potentially shore up earnings for JPB,” it said.

JPB will also begin operations of a solid product jetty at Pengerang under a 25-year port operatorship agreement by mid-2019 with an annual capacity of 130,000 TEUs, MIDF Research said.

The research firm adjusted MMC’s earnings forecasts upwards slightly for FY19 and FY20 by less than one per cent to RM235.2 million and RM257.4 million, respectively with a higher target price of RM1.39 from RM1.37 previously.

This is after taking into account of the higher expected volume at JPB following the commencement of the solid product jetty and other housekeeping adjustments, it added.

No changes were made to other major assumptions, it said.
Source: New Straits Times