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MMC likely eyeing stake in Sabah Ports
Published on: Friday, August 11, 2017

Kuala Lumpur: MMC Corp Bhd is holding talks with Suria Capital Holdings Bhd to buy a stake in Suria Cap's wholly-owned subsidiary Sabah Ports Sdn Bhd.

How large a stake MMC is looking to hold is not clear. Neither is it known if Suria Cap would give up control of its ports, according to the Edge.

Warisan Harta Sabah Sdn Bhd, the investment arm of the state government, controls 45.4pc of Suria Cap.

Yayasan Sabah Group has 3.67pc equity interest in the company while Chief Minister, State of Sabah holds 1.66pc.

This means that the state has a 50.73pc stake in Suria Cap. Sabah Ports has a 30-year concession, which commenced in 2004, to manage and operate eight ports in the state.

They are Kota Kinabalu Port, Sapangar Bay Container Port, Sapangar Bay Oil Terminal and Kudat Port – all located on the West Coast of Sabah – as well as Sandakan Port,Tawau Port, Lahad Datu Port and Kunak Port on the East Coast.

Last year, the Federal Government approved total funding of RM1.13 billion to develop Sapangar Bay Container Port as a transshipment hub, which would increase its container handling capacity from 500,000 twenty-foot equivalent units (TEUs) a year to 1.25 million TEUs a year.

A transshipment port is basically the drop-off and pick-up point for containers headed to smaller, less populated parts of a country.

It is not known if MMC buying into Sa-bah Ports would affect any existing terms and conditions.

Sabah Ports has two wholly-owned subsidiaries, SP Satria Logistics Sdn Bhd – which provides bunkering services and fresh water supply, among others – and SP Satria Sdn Bhd, which supplies and provides maintenance services for cargo handling equipment.

MMC, meanwhile, has a 70pc stake in Pelabuhan Tanjung Pelepas Sdn Bhd (PTP) in Johor and Tanjung Bruas Port in Melaka.

It wholly owns Johor Port Bhd, Northport (M) Bhd and Penang Port Sdn Bhd.

It also has 20pc equity interest in Red Sea GatewayTerminal Company Ltd, a container terminal in Jeddah Islamic Port in Saudi Arabia.

It is widely known that MMC is looking to float the shares of its port operating arm by next year.

Having a stake in Sabah Ports could be good for the group as it would have a presence in the Brunei Darussalam-Indonesia-Malaysia-Philip - pines East Asean Growth Area known as BIMP-EAGA.

The region covers a land area of 1.6 million sq km, with an estimated population of 70 million.

Sabah Ports could benefit from the link-up with the other ports under the MMC banner, as PTP, Northport, Johor Port and Penang Port are all capable of handling in excess of one million TEUs a year.

Last year, Sabah Ports registered cargo volume of 33.54 million tonnes,up 21pc from the year before.

The increase was mainly attributed to the higher volume handled at Sabah Oil and Gas Terminal in Kimanis.

While Sabah Ports mainly handles conventional cargo, MMC's ports are largely container handling facilities and collectively handled 12.33 million TEUs last year.

Of the 12.33 million boxes, 9.96 million were transshipment containers.

The total throughput, however, was down 3.29pc from 12.75 million TEUs in 2015.

Nevertheless, the total TEUs recorded by MMC's ports last year represented 49.6pc of Malaysia's total container throughput of 24.85 million TEUs for FY2016.

Sabah Ports' financial accounts with the Companies Commission of Malaysia have not been updated since 2003.

It is noteworthy, though, that Sabah Ports is Suria Cap's main income generator.

For the first quarter ended March this year, Suria Cap registered a net profit of RM13.08 million from RM58.71 million in revenue.

Port operations accounted for RM56.22 mil-lion or close to 96pc of revenue and almost 79pc of profit before tax.

As at end-March, Suria Cap had cash and bank balances of RM71.71 million, short-term borrowings of RM10.64 million and long-term debt commitments of RM409,000.

The company's other revenue genera-tor is property development.

It has a joint venture with SBC Corp Bhd to develop the 16.25-acre Jesselton Quay project at Tanjung Lipat, Kota Kinabalu.

MMC, meanwhile, is the dominant con-tainer port operator in the country.

Other than port operations, it has interests in pow-er generation, supply of natural gas, water treatment, engineering and construction, among others.

Interlinked with MMC's port operations are haulage and logistics operations, spear-headed by companies such as Kontena Nasional Bhd and JP Logistics Sdn Bhd.

At its close of RM2.35 last Friday, MMC had a market capitalisation of RM7.15 billion.

Suria Cap ended trading last Friday at RM2.09, giving it a market capitalisation of RM602.3 million.

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