- Sime Darby’s subsidiary, Weifang Sime Darby West Port Co Ltd (WSDWP), has inked an MoU with Yantai Port Holdings Co Ltd and Zhoushan Guanquan Shipping Co Ltd to accelerate the development of the container business at Weifang Sime Darby Port in Shandong Province.

- In an announcement yesterday, Sime Darby said they intend to jointly establish a JV company to operate container handling operations through the leasing of the existing container berths and facilities at Weifang Sime Darby Port.

- The JV will invest and operate a 3x30,000 tonne-container terminal and a supporting container freight station (New Container Terminal Project) within Weifang Sime Darby Port.

- Sime Darby now owns 99% of Weifang Sime Darby Port (1% held by the Weifang Port Bureau), which is located on the Bohai Sea’s economic belt of the Shandong peninsula.

- The multi-purpose port handles mostly bulk (both dry and liquid) and general cargoes. We had earlier reported that container handling in the near future features prominently in the plan.

- The port posted a 28% rise in total throughput from 14.4mil tonnes in FY11 to 18.5mil tonnes in FY12.

- Weifang Port is implementing a five-year development plan to double total throughput to 50mil tonnes by FY16. The plan involves raising its capacity by 4.5x to handle ~100mil tonnes of cargo per annum by FY16 from FY11’s 22mil tonnes.

- Sime Darby had earlier this year announced the signing of an MoU with the Weifang Municipal Port and Navigation Bureau for the construction of two 30,000 tonne liquid chemical terminals, three 30,000 tonne multi-purpose terminals and three 30,000 tonne general terminals at Weifang Port. The total cost is estimated to be over RMB2.0bil (~RM1bil).

- We maintain our forecasts, and our BUY call for the stock, with a fair value of RM11.20/share – a 10% discount to our sum-of-parts value of RM12.45/share. 

Source: AmeSecurities