KUALA LUMPUR: RHB Investment Bank Bhd (RHB Research) has a "neutral" stance on the transportation sector after the companies' third quarter results generally met estimates.
The firm's economists expect global demand to remain stable in 2025, although they are cautious about potential trade impacts from US protectionist policies.
The research firm in a note said that its economists remain positive on 2025 global demand, forecasting above-consensus gross domestic product (GDP) growth of 2.0 and 4.8 per cent for the US and China.
RHB Research is optimistic over Malaysia's air passenger movements, anticipating another year of growth in 2025 that is likely to surpass pre-pandemic levels supported by visa-free travel for Chinese tourists,e-Gate immigration, and airport expansions in Subang, Penang, and Kota Kinabalu.
The research firm said airports operator Malaysia Airlines Holdings Bhd (MAHB) performance for the first nine months (9M) of 2024 came in line with its own and Street's estimations.
Revenue rose 20 per cent to RM4.3 bilion from last year, aligning with the ongoing traffic recovery that sees a higher international passenger mix, which results in higher passenger service charges and retail spending, leading to a 72 per cent growth in 9M 2024 core earnings to RM592 million.
"Post results, we cut our 2024 Malaysia passenger traffic forecast to 95.2 million - we believe previous 105.9 million assumption was too bullish," it added.
RHB Research said regional seaport congestion has eased as shippers adapt to longer routes amid Yemeni Houthi rebel attacks on vessels using the Red Sea and Gulf of Aden.
In logistics, it said that DHL anticipates elevated freight rates due to potential US port strikes, tariffs, and prolonged Red Sea diversions.
The firm said MAHB and Westports Holdings Bhd are fairly valued, as the latter's share price has risen 32 per cent to its peak this year while the former's privatisation is progressing (set for delisting in first quarter of 2025).
"Within the logistics sector, we remain positive on Tasco Bhd, our top pick, due to its diversified client base and business segments, which help maintain earnings stability."
"Additionally, the integrated logistics services (ILS) tax incentives provide a cushion against challenges within the sector," it added.
Downside risks include a continued slowdown in global economic growth – which will paralyse trade flows – and a further weakening of freight rates.