KUALA LUMPUR (Jan 4): RHB Investment Bank Bhd (RHB IB) has maintained its "overweight" rating of the transportation sector, citing signs of recovery in trade and tourism activities in 2024.

In a sector update report on Thursday, RHB IB said the sector would benefit from the rebound in export momentum, the implementation of visa-free facilities for tourists from China and India, and the resolution of regulatory overhangs for Malaysia Airports Holdings Bhd (MAHB). 

The research house said it likes MAHB (buy; target price or TP: RM8.60) for its exposure to international tourism recovery at its Malaysian and Turkish airports, as well as the potential upside from the new operating agreement and the aeronautical charges framework. 

“MAHB remains a top pick due to the robust recovery of international tourism at its Malaysian and Turkish airports, driven by China’s outbound travel and the resumption of airline capacities. We also anticipate the resolution of regulatory overhangs in the first quarter of 2024,” it said.

RHB IB also picked Tasco Bhd (buy; TP: RM1.35) as its top choice within the logistics sector for its diversified client base, business segments that would sustain its earnings base, and the integrated logistics services (ILS) tax incentive that would offer a buffer against sector headwinds.

“Tasco stands out for its diversified client base and business segments that would sustain its earnings base, as well as the ILS tax incentive that would offer a buffer against sector headwinds,” it said. 

Commenting on the proposed land bridge project by Thailand, which aims to connect the Gulf of Thailand and the Andaman Sea with two ports and a highway, the research house said it remains sceptical about the project’s feasibility and impact on Malaysian ports, logistics and transportation dynamics. 

“While this proposal is deemed more feasible than the Kra Canal, certain challenges persist, including security concerns in Southern Thailand, the mountainous terrain that the highway must traverse, and environmental considerations. 

“Nevertheless, should regional trade continue to expand, it is conceivable that the land bridge could complement rather than compete with existing transportation infrastructure along the Strait of Malacca,” it said. 

On a side note, RHB IB pointed out that courier industry players such as GDEX Bhd (sell; TP: 12 sen) are still facing challenges due to the unfair pricing competition from online marketplace players, with stricter regulations and minimum pricing per parcel. 

The research house also has a "buy" call on FM Global Logistics Holdings Bhd, with a TP of 68 sen, and a "neutral" stance on Westports Holdings Bhd, with a TP of RM3.60.