We maintain HOLD on Bintulu Port (BiPort). The Group has been granted an extension to continue to operate Bintulu Port until end-2025, which is within our expectations. While there is upside to tariffs from completion of the new Port Operations Agreement, we believe it may only materialise in 2026. Our DCF-derived TP of RM6.40/share implies a CY25 PE of 17.9x, at par to its 5-year average which we believe is fair based on our prudent outlook over its growth prospects. BiPort currently trades at a 1-yr fwd PER of 16.8x.

• Third-Interim Agreement formalised. BiPort announced that its wholly-owned subsidiary Bintulu Port Sdn Bhd (BPSB) has entered into its third-Interim Agreement with the Ministry of Transport (MoT) and the Bintulu Port Authority (BPA) which grants the former rights to operate Bintulu Port over the next 12 months (1 January to 31 December 2025). This follows the second interim agreement which ended on 31 December 2024. Recall that the IA is to facilitate the transfer of regulatory powers over Bintulu Port to the Sarawak State Government.
• Extended timeline within expectations. Completion of the entire exercise will involve: (a) centralisation of the port authority (into Bintulu Port Authority Sarawak) and (b) finalisation of the Port Operator Agreement (POA) between the State Government, the port authority and BPSB which is currently ongoing, according to management. Though we are hopeful, we do not discount the process taking longer than expected as centralisation of the port authority has yet to be announced.
• Tariff hike key for rerating. The new POA is expected to be accompanied (or followed shortly) by a 10% hike in tariff for Bintulu Port, which is a key rerating factor for the Group as it has not seen any revision since 1993. For reference, tariff charged at Bintulu Port is currently RM207.50 per twenty-foot equivalent unit (TEU) for local containers or 38% below the level charged at Samalaju Industrial Port. Our sensitivity analysis shows that a 10% hike this year will result in a material ~6.4% increase in Group FY 2025 Core Net Profit (CNP).

Source: AmInvest Research - 3 Jan 2025