KUALA LUMPUR (Oct 19): MIDF Amanah Investment Bank Bhd Equity Research has maintained its "neutral" rating (NR) on the logistics sector, and said it does discount the possibilities of last-mile delivery players and e-commerce platforms participating in the Digital Free Trade Zone (DFTZ).

In a strategy note Oct 18, MIDF Research said this would include Century Logistics Holdings Bhd (NR), Freight Management Holdings Bhd (NR) and Xin Hwa Holdings Bhd (NR).

It said in tandem with promoting technology adoption amongst SMEs, last-mile delivery players are prompted to up their ante in being more technology savvy.

"GD Express Carrier Bhd (GDEX) (Neutral; TP: 46 sen) has planned to enhance [its] automation for its sorting hub in PJ that will increase the average sorting capacity to above 300,000 parcels per day.

"Moving forward, we view that GDEX would set to benefit for any form new incentives by the Government to further accelerate its technology adoption," it said.

Meanwhile, MIDF Research said the development of new highways has bode well for expanding the reach of last-mile delivery and trucking companies.

Nonetheless, it said congestion at roads remains an issue, prolonging delivery times.

"The modal shift from road to cargo could pose a risk to companies such as Tiong Nam Logistics Bhd (Neutral, TP: RM1.02) through their trucking business if customers opt for delivery of cargoes via railway," it said.