Syed Mokhtar could be planning IPO for ports, says analyst

By Lee Wei Lian

March 30, 2012

KUALA LUMPUR, March 30 — The reported acquisition of Penang Port by a firm controlled by Tan Sri Syed Mokhtar Al-Bukhary could lead to an eventual public listing of all three ports that are now either already or poised to be part of his empire.

The Malaysian Insider reported this week that Syed Mokhtar’s officials are already running Penang Port, some 15 months after the Cabinet approved its sale to the tycoon.

A business daily also reported today that while Penang Port has not been officially notified of a takeover by Syed Mokhtar, the northern port operator has been directed by the government to cooperate with a firm linked to the tycoon.

OSK head of research Chris Eng said in a report today that it is likely that a takeover of Penang Port by Syed Mokhtar will eventually see the port being injected into his flagship enterprise, MMC, the current owner of Johor Port and Port of Tanjung Pelepas (PTP).

“The three ports may then be brought under a single entity which could then proceed to an IPO after Johor Port’s container operations are transferred to PTP,” said Eng.

“This will bode well for MMC as it should be able to unlock some value at both Johor Port and PTP as well as allow easier fund raising for the still fast growing PTP.”

The chief analyst also said that the control of Penang Port could be part of a logistics masterplan by MMC, which is currently evaluating the takeover of Keretapi Tanah Melayu Berhad (KTMB).

“With both the northern and southern ports in Peninsula Malaysia potentially becoming part of the group, MMC could perhaps derive some economies of scale from large scale logistics operations,” said Eng.

“In any case, if the takeover of Penang Port and KTMB materialises, MMC would be the only private company in Malaysia with such a diverse and strategic asset base, which makes it a direct proxy to the health of the Malaysian economy.”

Eng said, however, it is still too early to assess any impact on MMC’s bottomline from a potential takeover of Penang Port.

OSK has a trading buy on MMC with an unchanged fair value of RM3.70.