Changes are happening on several fronts at port operator Bintulu Port Holdings Bhd. For one, Amir Hamzah Azizan, president and CEO of national carrier MISC Bhd, was appointed to the board of the port operator last week.

On another front, Kumpulan Wang Amanah Persaraan (KWAP) has further reduced its stake in the port operator, known for its healthy dividend returns.

Amir Hamzah’s entry in Bintulu Port is possibly by virtue of oil major Petroliam Nasional Bhd (Petronas) controlling 32.8% of the port’s equity, and MISC Bhd having an additional 2.6%. Petronas also controls 62.4% of MISC.

Much of Bintulu Port’s earnings stems from its shareholders Petronas and MISC.

For the year in review, Bintulu Port posted a net profit of RM150.6 million on the back of RM448.8 million in revenue. In contrast to a year ago, net profit was up 11.1% while revenue gained 7.6%

The port earns the bulk of its revenue from MISC, as the latter’s tankers calls at Bintulu Port to load Petronas’ liquefied natural gas (LNG). According to its latest annual report, MISC contributes about 78% of Bintulu Port’s operating revenue. Hence, despite the economic slowdown, the port’s earnings are expected to be resilient as LNG supply contracts are generally long term — from 15 to 20 years.

KWAP paring down its stake
Thus, considerable interest is generated as to why KWAP is paring down its stake.

Besides Petronas and the Sarawak state financial secretary, which has a 30.7% stake, the only other substantial shareholder is Kumpulan Wang Persaraan.

Over the past year, Kumpulan Wang Persaraan has disposed of about 17.1 million, or 4.3%, in Bintulu Port Holdings, and in the process, trimmed its stake to 10.6% or 42.6 million shares.

However, it is not known who has acquired the shares or at what price they were disposed of. Bintulu Port’s shares were trading at between RM6.60 and RM5.20 at the time of the disposal.

The sale of the shares by Kumpulan Wang Persaraan also raised quite a few eyebrows as Bintulu Port is generally an illiquid counter, with the top 30 shareholders controlling some 94% of the company’s stock. The 30 are almost entirely institutional stakeholders. This would also mean that Bintulu Port would be deemed an ideal stock for Kumpulan Wang Persaraan to own, considering its good dividends and defensive qualities. Bintulu Port has a gross dividend yield of about 5.5%.

Kumpulan Wang Persaraan had emerged in Bintulu Port at the end of March 2005, taking over 15.5% from state-controlled investment arm Khazanah Nasional Bhd.

Khazanah had swapped shares in the port with Kumpulan Wang Persaraan for shares in Commerce-Asset Holdings Bhd (now Bumiputra-Commerce Holdings Bhd) held by the government pension fund, then known as Kumpulan Wang Amanah Pencen.
However, it is noteworthy that Kumpulan Wang Persaraan came into Bintulu Port when its stock was trading at about RM3.80, which would indicate that the pension fund can dispose of its shares, after making gains from both Bintulu Port’s dividend payments and capital appreciation.

Expansion plans
There have also been other changes at the port albeit at an operational level. Breaking their usual guarded silence, Bintulu Port’s officials said last week that some RM600 million will be spent on expansion works, boosting the port’s cargo handling capacity.

Container handling capacity will be beefed up to 650,000 TEUs (20-foot equivalent units) from the current 400,000 TEUs, by next year. As part of the initiative, a contract valued at RM15 million was awarded to privately held Juara Beetuah Sdn Bhd, a Sarawak-based construction company, to build a container freight station.

Other initiatives include expanding the multi-purpose terminal and building 10 storage tanks for palm oil, thus boosting capacity by some 25% to about 100,000 tonnes. There will also be some allocation for the purchase of cargo handling equipment, news reports say.

Mior Ahmad Baiti Mior Lub Ahmad, Bintulu Port’s CEO, says  these initiatives are set to be completed by 2011, which could coincide with a rebound in container shipping.

Bintulu Port is one of the main ports in the BIMP-EAGA (Brunei, Indonesia, Malaysia, Philippines-East Asian Growth Area), and stands to benefit from higher levels of economic activity. 

These developments should not pose much difficulty for Bintulu Port, financially at least. For the year ended December 2008, the company had cash and bank balances of RM10.2 million, while its short-term deposits were some RM451.5 million. During the period, its total liabilities were RM200 million.

A chunk of Bintulu Port’s earnings comes from port charges imposed on MISC’s LNG tankers. The high charges of RM800,000 had been the cause of some tension between Petronas and the Sarawak government. The issue was raised about six years ago.

Tan Sri Hassan Marican, Petronas’ CEO, had said back then that the receiving terminals in Tokyo were charging MISC less than what it incurred in Bintulu Port. Industry sources had estimated the fee at Tokyo to be about US$100,000 (about RM380,000).
It is not known if the charges are less now. However, analysts who cover Bintulu Port’s stock say the current charges for the LNG vessels are about RM750,000 per ship.

Bintulu Port closed on Thursday unchanged at RM6.05. Year to date, it has gained about 8%.

Could there be more changes at Bintulu Port? With KWAP paring down its stake, will a new shareholder emerge at the port operator?

This article appeared in the Corporate page, The Edge Malaysia, Issue 753, May 4-10, 2009.