MIDF Research had downgraded the ports sector from neutral to negative in face of weaker exports to the faltering US economy and Europe's sovereign debt crisis.
It said on Monday, Oct 3 that Malaysia's export slowed down as it posted a 7.1% year-on-year (y-o-y) growth in July 2011 from 9.6% y-o-y increase in June 2011.
In terms of sequential month, July's export was 2.2% month-on-month (m-o-m), lower than 5.1% m-o-m posted in the previous month, it said.
"We believe that this had led to the decline in Electrical and Electronics exports where it continued to decline for the fifth consecutive month," it said.
The research house said the declining exports would add pressure to seaports, especially container based ports given that rates are fiercely competitive.
Meanwhile, port traffic is seeing signs of easing as well as NCB HOLDINGS BHD 's faltering port twenty-foot equivalent units (TEU) growth.
The group posted a decline of 3.4%y-o-y in its 1H11 port TEU while port revenue fell by 1%y-o-y. Also, port profit before tax margin declined by 5.8 percentage points, which suggest the company was facing margin squeeze and rates pressure.
However, the research house maintained its Neutral rating on NCB citing its defensive qualities as its dividend policy would moderate weaken sentiments.