Friday 29 Mar 2024
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KUALA LUMPUR (March 26): Straits Inter Logistics Bhd (SIL) was actively traded this morning after Maybank Investment Bank Research initiated coverage on the stock with a buy call and share price target of 38.5 sen.

This is a 40% upside from the counter's current trading share price of 27.5 sen. The stock, currently unchanged, was actively traded this morning with 14.83 million shares done.

In a note yesterday, Maybank said SIL's business model has revolved from manufacturing and trading of water and air filter products to trading of oil products and offshore bunkering services.

It said SIL's bunker services growth is inorganic in nature following the purchase of a 55% stake in Tumpuan Megah Development Sdn Bhd (TMD) in Septmber 2018. With that, SIL now operates at nine ports in Malaysia (versus two previously) with a loaded capacity of 12 million litres per annum (versus 1 million litres before).

"This makes up 33% of the legal market share in Malaysia. To further complement this, SIL targets to expand its bunkering services to include land logistics through its 70%-owned Straits Alliance Transport," said Maybank.

SIL is also a direct beneficiary from rising oil and gas activity in Malaysia, said Maybank.

"It is also in an entrenched position to capture increasing marine gas oil (MGO) demand from the planned implementation of International Maritime Organization's (IMO) global sulphur cap in 2020. As a licensed operator, a step-up in regulatory efforts to tackle the illegal and 'dirty' bunkering business will also directly benefit SIL," it added.

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