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Maybank IB Research: ‘Buy’ for bunker firm Straits Inter Logistics

27 Mar 2019

Maybank IB Research on Monday (25 March) issued a ‘buy’ rating for Malaysia-listed bunkering firm Straits Inter Logistics (SIL) with a recommended share price target of 38.5 sen (40% up from current share price of 27.7 sen).

“SIL is one of the very few licensed bunker operators in a fragmented and unregulated environment in Malaysia,” it states in a report.

“We posit that SIL’s investment angle emanates from: (i) rising upstream activities in Malaysia, (ii) structural changes to the bunkering business and (iii) the step-up in enforcement of illegal bunkering activities.

“SIL offers a solid growth for an under-the radar micro stock (market cap MYR169m).”

The report notes of SIL’s target customers to be mainly OSV operators, which accounts for 70% of its customer base.

“We are encouraged that most of the domestic O&G activities, across the services value chain, is on the rise,” it explains.

“This is premised on PETRONAS’ latest Activity Outlook (2019-21) report vis-à-vis its 2018-20 issue a year ago.

“SIL is a direct beneficiary from this development, especially in the OSV segment, which consumes MGO for its bunker requirement.”

The report also notes of SIL’s expansion activities including Straits Marine Fuels & Energy Sdn Bhd (SMF), Straits Alliance Transport Sdn Bhd (SAT) and Banle Energy International Limited.

SIL current owns and operates nine Malaysia-flagged bunkering vessels ranging from 530 DWT to 4,700 DWT and delivers low sulphur marine gas oil (LSMGO) to nine locations in Malaysia.

Manifold Times on Wednesday (20 March) reported SMF allegedly acquiring two bunker tankers.

SIL ended financial year 2018 with a 61% increase in net profit.

Related: Straits Marine Fuels & Energy to welcome ‘identified parties’ as partner
Related: Straits Inter Logistics makes land logistics expansion
Related: Straits Inter Logistics meeting approves Banle Energy acquisition
Related: Straits Marine Fuels & Energy acquires two bunker tankers
Related: Straits Inter Logistics ends 2018 with 61% profit increase

Photo credit: Straits Inter Logistics
Published: 27 March, 2019

 

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