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Sector             : Transportation and Logistics

Sub Sector     : Transportation and Logistics Service

Focus : Port Operation


Industry Review


Base on Linear Shipping Connect Index  (LSCI) which measure the maritime connectivity base on five components annually

  1. The number of shipping lines servicing a country

  2. The size of the largest vessel used in services (in TEU)

  3. The number of services connecting from one country to another country

  4. The total number of vessels deployed in a country

  5. The total capacity of those vessels (in TEU)


From the table published by UNCTAD, the LSCI around the world does not reduce despite the Covid 19 Pandemic. As of Q3 2020 Malaysia ranked 4th in the Asia region right behind China, Singapore and Korea while ranked 5th in the world behind China, Singapore, Korea and the United States of America.


Malaysia had 3 public listed company listed in BURSA Malaysia which is

  1. Bintulu Port Holdings Berhad (BIPORT) - SARAWAK

  2. MMC Corporation Berhad (MMCCORP) - Straits of Malacca and Saudi Arabia

  3. Westports Holdings Berhad (WPRTS) - Port Klang


Business Diversification


Let look at the business diversification of the company by looking at the percentage of revenue obtained from port operational business.



Company

Revenue 2020 (Port Operation)

Percentage of Revenue (Port Operation)

BIPORT

RM 669,285,000

93.51 %

MMCCORP

RM 3,261,390,000

69.61 %

WPRTS

RM 1,974,968,000

100.00 %


From the table above MMCCORP had the highest revenue for financial year 2020 however MMCCORP had diversified into other business such as, energy and construction instead of just focusing on port operation. Both MMCCORP and WPRTS had operations in port klang while WPRTS had around 80 % of market shares in port klang. MMCORP had operated other ports located in Penang, Johor and Saudi Arabia asides port in port Klang.


BIPORT operated ports in Bintulu, Sarawak with 93.51 % of the revenue are from port operation while the remaining are from bulking service.


Operation


Operational margin ratio is calculated and use as a comparison. Companies with the highest operating ratio have more probability to survive in today's pandemic. The average operational margin ratio of the three companies for 2020 is 33.61 %



Company

Operating Margin Ratio 2020

Operating Margin Ratio 2019

BIPORT

25.52 %

31.82 %

MMCCORP

28.21 %

22.10 %

WPRTS

47.11 %

47.61 %


BIPORT operating margin had affected by the pandemic with a reduction from 31.82 % in 2019 to 25.52 % in 2020 which is 19.80 % reduced while the other two companies are not affected much from the pandemic.


WPRTS had the highest operating margin ratio compared to the other two companies in 2020 and 2019.


Sustainability


For the sustainability of the business, debt of the companies is being reviewed. There are two criteria to look at the interest coverage ratio which is use to determine how easy the companies able to pay off the interest of outstanding debt and debt to equity ratio. The average of interest coverage ratio for 2020  is 5.73  and debt to equity ratio is 0.62.


Company

Interest Coverage Ratio 2020

Debt to Equity Ratio 2020

BIPORT

2.43

0.68

MMCCORP

3.48

0.71

WPRTS

11.28

0.46


WPRTS have the highest interest coverage ratio and lowest debt to equity ratio for the year 2020.


Assets & Liabilities


5 years Compound Annual Growth Rate (CAGR) of assets and liabilities were calculated to make comparison.


Company

5 years CAGR of Assets

5 years CAGR of Liabilities

BIPORT

1.11 %

-1.12 %

MMCCORP

1.52 %

2.15 %

WPRTS

2.52 %

-3.76 %


Summary


From the above comparison WPRTS is worth further detailed analysis.




http://ivkls.blogspot.com/2021/06/industry-comparison-port-operation.html

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