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Tue 2 Jan 2018 12:32

Equity broker selects Straits Inter Logistics as top stock pick for 2018


Selection follows five consecutive quarters of profits for the bunker firm.



Malaysia's first fully fledged online equity broker, Rakuten Trade Sdn Bhd, has selected Straits Inter Logistics Bhd - owner of marine fuel specialist Selatan Bunker (M) Sdn Bhd - as its top stock choice for 2018.

The Bursa Malaysia-listed business - formerly known as Raya International Bhd - has achieved a profit in the last five quarters, and during the first half of the year posted a cumulative net profit of MYR 1.17 million.

Rakuten Trade research vice-president Vincent Lau was quoted on Tuesday by local news service The Star as saying: "Initially there was much scepticism on the stock when it took over the listing status of Raya International Bhd. Now we have seen five consecutive quarters of profits. We will reassess our estimates once they announce their full-year results next month."

In August, the company named Dato Sri Ho Kam Choy as its new managing director, who has a plan in place to drive bunkering growth during his tenure.

Growing importance of bunkering in financial results

The increased importance of bunkering in terms of the firm's financial results was evident during the last reported quarter (Q3), where revenue from oil trading and bunkering rose year-on-year (YoY) by RM 12.79 million ($3.11 million), or 63.4 percent, to RM 32.96 million ($8.02 million).

The figure also represented the total revenue amount for the group, with no revenue recorded for consultancy services; general trading; and air filtration system, fast moving consumer product and ancillary support services.

Profit achieved from oil trading and bunkering increased YoY by RM 663,000 ($161,200), or 300 percent, to RM 884,000 ($215,000) in Q3.

Significantly, even though overall profit for the period was up YoY by RM 476,000 to RM 504,000 ($122,570), it was lower than the profit achieved by the oil trading and bunkering segment due to a RM 380,000 loss recorded for the investment holding division.

Future plans

Straits' subsidiary Selatan Bunker was launched in 2015. The company, which principally operates at the port of Pasir Gudang, commenced oil trading and bunkering via a collaboration agreement with Tumpuan Megah Development Sdn Bhd.

Two delivery vessels recently acquired by the company - Sturgeon 1 and Straits 1 - commenced bunkering operations at Pasir Gudang in Q4.

Regarding the company's plans for the future, Straits has said it intends to expand its oil trading and bunkering asset base, strengthen its operational capabilities and extend its geographical presence in order to capture "growth opportunities" in the Malaysian bunkering sector.

"The company will assess the demand from potential customers after undertaking its marketing activities and will utilize funds raised from its rights issue and internally generated funds to undertake the oil bunkering activities in the coming year," Straits said in November.


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