Regional aviation and port markets have changed slightly, but they still have a long path to recovery.
Affin Hwang Capital Research said it had been reinforced by a virtual meeting with five industry players that the sectors would not recover until at least next year.
The company recently hosted Malaysia Airports Holdings Bhd, Westports Holdings Bhd, MMC Corporation Bhd, Pos Malaysia Bhd and GD Express Carrier Bhd (GDEX) at the Transport & Logistics Virtual Conference in Affin Hwang, Germany.
They will comply with the opinion of MAHB and Westports that the rate of activity will rebound from the weak second quarter (Q2) 2020 but is unlikely to rise to pre-COVID-19 rates in the second half of 2020 and 2021. Affin Hwang has retained its “underweight” call to the transport and logistics industry owing to the effects of the Covid-19 pandemic leading to its poor earnings visibility.
Due to the tough market climate, they tend to ignore the aviation field. However, we retain our Westports ‘keep’ rating though its container volumes are impacted by lower economic development, the decline is not as extreme and Westports has a strong balance sheet to withstand the slowdown.
It said that the aviation sector was confronted with a very challenging market climate and that MAHB had adopted a comprehensive Covid-19 strategy to improve its financial position. In its five-month passenger movements for 2020, MAHB announced a significant 54 per cent decrease.
Looking ahead, MAHB expects its Turkish operations to recover slightly better than those of Malaysia, and is hopeful that by late-2021 or 2022 passenger movements will be able to return to pre-covid levels. In the meantime, the firm said the port segment was seeing weaker results in Q2 2020 and Westports could see a sharper year-on-year decline in output compared to MMC.
Westports intends to see the monthly amount of containers fall in the second half of 2020, but the decrease will not be as drastic as in 2Q20. The MMC deferred or lowered their capex to ease the Covid-19 cash flow effect,” Affin Hwang said.
The firm said Pos Malaysia and GDEX had reported higher amounts of packages in the postal and courier market in May. Pos Malaysia predicts that the phenomenon will begin in the second half of 2020, but GDEX feels it is too early to predict.