EVERY day, thousands of tonnes of goods make their way from Peninsular Malaysia to Sabah and Sarawak – from rice and sugar to diapers, milk powder and beverages.
For MTT Shipping and Logistics Bhd (MTTSL), these are more than just containers moving across the South China Sea.
It is a market the container liner operator has spent years building its business around – and one that is poised for further growth as Sabah and Sarawak’s economies expand and industrialise.
The company already commands about 46% of the Peninsular Malaysia-to-Sabah and Sarawak container market.
Traditionally, the trade lane has been dominated by goods moving east, with relatively little cargo returning to Peninsular Malaysia.
That is changing as Sabah and Sarawak’s economies grow, with rising consumption driving demand for more goods flowing in, while industrial development is creating more cargo moving out.
When MTTSL first started its business, its vessels were returning from Sabah and Sarawak with only about 15% of their capacity filled.
Today, managing director Ooi Lean Hin (pic) says that figure has risen to about 45%.
The improvement in return cargo, he says, reflects a broader shift as foreign direct investment (FDI) and industrial development create more export-oriented cargo.
“What is coming into Sabah and Sarawak, in terms of FDI, is more export-oriented industries,” Ooi tells StarBiz 7.
He points to investments in Sarawak’s aluminium and alloy industries as examples of developments generating more cargo.
“We are beginning to see more economic multiplier effects on the general economy. Consumption demand should rapidly go up, particularly in areas like Bintulu where we see a lot of growth coming up,” he adds.
IPO fuels fleet expansion
The growing demand comes at an opportune time for MTTSL, which has embarked on a fleet expansion.
MTTSL currently has 26 container vessels, of which 24 are owned, with a combined capacity of 29,149 twenty-foot equivalent units (TEU) and an average age of 7.2 years.
Fifteen vessels are self-operated, with utilisation above 90%, while 11 are chartered out.
After raising RM653mil through its initial public offering (IPO) in April, MTTSL ordered 12 new vessels comprising six 3,300-TEU ships, four 1,400-TEU ships and two 1,100-TEU ships.
The new vessels will add 27,708 TEUs of capacity and are expected to increase the group’s container shipping capacity by about 95% by 2029.
The new vessels were originally intended to replace some of MTTSL’s older ships. However, with the market still tight, Ooi says the company has decided to extend the trading lives of some older vessels by another two-and-a-half years.
“Put aside the decarbonisation targets imposed by the International Maritime Organisation, but there are simply not enough ships,” he says, adding that the shortage is particularly acute among smaller vessels.
He says intra-Asia trade is being driven by supply chain realignment, the China+1 strategy and China’s efforts to diversify its markets.
“This area is an area of growth, which means there is more demand for this size of ships,” he says.
In contrast, larger vessels of more than 14,000 TEUs are mainly deployed on East-West routes and are less suited to intra-Asia trade.
The tight vessel market is also supporting MTTSL’s charter business, with some existing customers already expressing interest in extending their contracts before expiry.
Diversifying beyond containers
Beyond container shipping, MTTSL is also looking to diversify its fleet, with two chemical tankers scheduled for delivery by year-end and discussions under way to bring in a partner.
Ooi says the vessels could serve the growing methanol trade in the region, although they would not be dedicated solely to methanol.
Alongside its fleet expansion, MTTSL is investing in integrated freight facilities (IFF) to address gaps in Sabah and Sarawak’s logistics infrastructure.
The IFFs combine warehousing, container depot and automotive logistics services, allowing MTTSL to offer an end-to-end logistics solution.
The group currently has operational IFFs in Kota Kinabalu and Pulau Indah, with further facilities in Kuching and Bintulu targeted for completion in 2028.
Ooi says utilisation at the facility remains “quite low” as customers are still tied to existing contractual arrangements with other logistics providers.
However, he expects occupancy to build up over the next 18 to 24 months as those contracts expire.
“But the good news is that we have a lot of people who are interested,” he says.
For Ooi, the investment is about more than adding warehouse capacity.
“We invest because we see gaps in the infrastructure in Sabah and Sarawak,” he says, pointing to the need for more reliable logistics facilities in the region.
With the Kuching and Bintulu facilities targeted for completion in 2028, MTTSL aims to build a wider IFF network linking Peninsular Malaysia with Sabah and Sarawak, and provide a more integrated logistics service.
For the second quarter ended June 20, 2026, MTTSL posted revenue of RM360.36mil and net profit of RM94.51mil, translating into earnings per share of 3.78 sen.
This brought its first half of 2026 (1H26) revenue to RM658.7mil, while net profit stood at RM159.93mil and earnings per share at 6.40 sen.
No year-on-year comparative figures were provided as this was the container liner operator’s first interim financial results since its listing on the Main Market in April.
Ooi is confident the momentum will continue into the 2H.
“What is driving this (optimism) is charter rate, also our volume growth. Our business is growing,” he says.
Beyond its domestic routes, MTTSL is also looking to grow its regional business as its fleet expands.
Ooi says regional volumes remain relatively small for now because of the group’s limited fleet size, but this is expected to change as more vessels come into service.
“As we expand, we will expect the regional volume to be growing. At some point, it might even overtake the domestic,” he says.
The group is looking at markets including South-East Asia, China and India, where Ooi sees stronger growth potential.
MTTSL’s gearing stands at about 0.35 times, while it maintains a dividend policy of paying out at least 50% of its earnings.
It has declared its first tax-exempt interim dividend of 3.2 sen per share in the 1H26, amounting to about RM80mil, or 50% of its 1H26 net profit.
Since its listing at an IPO price of RM1.03 a share, MTTSL’s stock fell to a low of 89.5 sen in May before recovering to a high of RM1.42 on Aug 26. At last look, it was trading at RM1.29, valuing the company at RM3.23bil.
BIMB Research, the sole brokerage covering the stock, has a “buy” call on MTTSL with a target price of RM1.25, according to Bloomberg.
In late July, London-listed Aberdeen Group plc emerged as a substantial shareholder after acquiring 126.86 million shares, or a 5.075% stake, through Abrdn Malaysia Sdn Bhd.
Aberdeen has since increased its stake to 5.57%, alongside executive chairman Datuk Seri Ong Kean Lee, who holds 22.39%, and Ooi, who holds 12.82%.