MIDF Amanah Investment Bank Bhd (MIDF Research) has maintained a NEUTRAL call on Malaysia's port and logistics sector as it navigates potential disruptions and opportunities stemming from Donald Trump's re-election as US President.

This scenario resulted in a surge in container traffic at ports worldwide, including those in Malaysia, as goods were moved ahead of the deadline. Major transhipment hubs, namely Port Klang and the Port of Tanjung Pelepas (PTP) in Johor, collectively recorded a surge of 11% year-on-year (YoY) in containerised transhipment volume in the second half of 2018. This trend continued into 4Q18, with growth further accelerating to 18% YoY.

The research house noted that comparable impacts could be seen in Trump's second term if the proposed blanket 10% tariff on all imports into the US, with a much higher 60% tariff on goods from China, being imposed during Trump's second term.

Despite the NEUTRAL stance on the sector, MIDF Research has issued a BUY recommendation on Tasco Bhd with a target price of RM1, primarily due to its appealing valuation, trading at -1SD below its five-year mean of price-to-earnings multiple based on its last closing price.

The research house added that Tasco's management indicated that the loss of volume from its major photovoltaic customer will be gradually offset by contributions from a pipeline of new customers, including a high-end automotive customer from whom it is currently providing customs clearance, container haulage and cross-border trucking services.

Moreover, Tasco is not expected to see significant earnings growth from any substantial increase in market freight rates as most of its business remains tender-based (lower profit margins compared to being based on spot rates).

Overall, the research house said Malaysian logistics firms are likely to face both opportunities and challenges in managing shifting trade patterns and their impacts on sector performance as Trump's trade policies take shape.