KUALA LUMPUR: Kenanga Research remains cautious on seaport operators in general, buffeted by a weak outlook for global trade. 

The World Trade Organisation (WTO) recently downgraded its global trade growth forecast for 2022 to three per cent (from 4.7 per cent), while remaining cautious for 2023 at 3.4 per cent. 

Kenanga Research said a recession in Europe was almost a foregone conclusion given the protracted Russia-Ukraine war, resulting in an energy crisis. 

Meanwhile, there is no sign of China coming out of the pandemic anytime soon given Beijing's ineffective zero-Covid policy which is prolonging global supply chain disruptions. 

Globally, consumer confidence and spending are likely to take a beating on sustained elevated inflation, rising interest rates and as households deplete their pandemic relief funds. 

Kenanga Research, however, sees a bright spot in the logistics sector locally given that it was primarily driven by domestic demand and it was also backed by a megatrend of growth in domestic e-commerce. 

Industry experts have projected local e-commerce gross merchandise volume to grow at a compound annual growth rate (CAGR) of 11 per cent from 2022 to 2027, while its size could reach RM1.65 trillion by 2025 from RM1 trillion currently. 

"The booming e-commerce will spur demand for distribution hubs and warehouses to enable just-in-time delivery, reshoring and nearshoring to bring manufacturers closer to end-customers, efficient automation system including interconnectivity with the customer system, and warehouse decentralisation to reduce transportation costs and de-risk the supply chain. 

"There is also a strong demand for cold-storage warehouses on the back of the proliferation of online grocery start-ups," the firm said in a note today.

Overall, Kenanga Research has maintained its "Neutral" call on the seaports and logistics sector.

Kenanga Research believes Bintulu Port Holdings Bhd will be able to weather these macro challenges better.

"This is all thanks to its stable operation in the handling of liquefied natural gas (LNG) cargoes, a potential hike in tariffs of Bintulu Port as well as the long-term growth potential of Samalaju Industrial Port's hinterland in Samalaju, Sarawak driven by the growing investment in heavy industries," it said in a note today.

Kenanga Research maintained its "Outperform" call on Bintulu Port, with an unchanged target price of RM9.50.

Another top pick was Swift Haulage Bhd for its leading position in the Malaysian haulage business commanding close to 10 per cent market share and above peers' pre-tax profit margin of 10 per cent compared to the industry's average of four per cent with its integrated offerings.

Kenanga Research maintained its "Outperform" call on Swift, with an unchanged target price of RM1.01.

On the back of a weaker global trade outlook, the firm cut its FY22 and FY23 earnings for Westports Holdings Bhd by nine per cent each, lowered its target price by four per cent to RM3.40 from RM3.55 but maintained its "Market Perform" call. 

Meanwhile, Kenanga Research has downgraded Pos Malaysia Bhd to "Underperform" with an unchanged target price of 55 sen, following a strong recovery in its share price which it believed is premature.

"The conventional mail business of Pos will continue to struggle to stay relevant in the digital age. 

"It will also have to rethink the strategy for its courier business given that e-commerce players (such as Shopee and Lazada) are beefing up their in-house delivery services, as well as strengthening their tie-ups with certain logistics players," it added.