KUCHING: The hive of industrial development in Samalaju is creating opportunities for players to cater to increasing demand for cargo handling in the immediate to long term for both the Samalaju and Bintulu ports, consequently benefitting Bintulu Port Holdings Bhd (Bintulu Port).
The two ports are expected to see increases in cargo demand of 13 million to 14 million tonnes and 100,000 twenty-foot equivalent units (TEUs) by 2015, outlined analyst Ahmad Maghfur Usman from OSK Research Sdn Bhd (Osk Research).
“Samalaju Port’s development is on track, with the construction of its two-barge berths and a Ro Ro ramp targeted to be completed by June 2013, before the completion of the port’s first phase in 2016,” he highlighted, adding that Bintulu Port was also allocating an initial capital expenditure (capex) of RM193 million for the two barge berths.
“While the combined development could exceed RM1 billion, the bulk of its capex will be used for land reclamation and dredging the water depth deeper from seven to 12 metres, in order to cater to Panamax vessels’ requirements,” he outlined.
Ahmad Maghfur said the barge berths would be able to handle a capacity size of four million tonnes per annum.
Meanwhile, Phase 1 of Samalaju’s development, which is expected to be completed by the first quarter of 2016 (1Q16), would see an additional three Panamax berths and one barge berth and an additional capacity of 14 million tonnes.
“Upon completion of Phase 1, Samalaju will be able to accommodate a combined capacity of 18 million tonnes,” he noted.
Looking at ongoing negotiations, the OSK Research analyst revealed that the long-drawn negotiations on tariff reduction for liquid natural gas (LNG) berthing and annual leases were still inconclusive.
“At the same time, management is also lobbying for tariff increases for both Bintulu and Samalaju ports to cushion the decline in revenue from LNG berthing.
“There are indications of a revenue downside of RM50 million from the 17 per cent reduction in LNG berthing tariffs, but this may be offset by about 20 per cent jump in revenue of RM20 million arising from the cuts in rental and port tariffs.
“Despite the reductions, management intends to maintain the current dividend payout.” As only two barge berths will be completed by mid-2013, the analyst believed cargo flows into Samalaju Port would mostly be via barges, and Bintulu Port would act as an import and export hub of raw materials and finished goods respectively with truck haulage also playing a major role in moving cargo on land.
He added that Samalaju’s need for industrial cargo throughput in the near term (by 2014) was expected to be in the range of eight million tonnes and roughly 30,000 TEUs of imports.
“Exports are expected to see an annual throughput of 3.5 million tonnes and 45,000 TEUs, which is smaller in tonnage size as most of these finished products are high-value goods,” he aid.
“The combined import and export tonnage from Samalaju?s development alone is expected to handle up to 14 to 15 million tonnes and 100,000 additional TEUs per annum by 2015.
“We understand that that Bintulu Port will continue with container handling in the immediate and longer term as management wishes to avoid any duplication.
“Come 2016 and upon the completion of Phase 1, the cargo flow from Samalaju will mostly shift to Samalaju Port as its berths can accommodate Panamax vessels.”
With uncertainties stilll lingering in relation to its tariff negotiations and the concession agreement for Samalaju Port, OSK Research sustained a neutral outlook for on Bintulu Port, with an unchanged fair of RM7.10 per share.