KUALA LUMPUR: CIMB Equities Research believes the floods in Penang state on Sunday, one of the worst in recent history, would have minimal or no operational disruption to the companies.

The research house said on Tuesday based on its channel checks, this event would have a minimal impact on the semiconductor companies given that the majority of manufacturing facilities are located in the Bayan Lepas area, which was not affected by the flooding.

Malaysian semiconductor companies with production facilities in the Bayan Lepas area include Aemulus, Globetronics and Inari-Amertron.

CIMB Research expect a minimal impact on automotive companies following the flood.

Inokom (owned by Sime and Bermaz), which is involved in the assembly and manufacturing of vehicles in Kulim, Kedah, was not affected.

DRB-Hicom does not expect a major impact on the auto division, but the group’s other operating businesses such as Pos Malaysia and Puspakom are affected by the flood.

UMW Holdings also does not expect the flood to have a major impact on the group.

As for the construction sector there is currently no critical risk of stop work orders for selected construction sites on Penang Island.

“However, we believe that there should be, to an extent, some disruption to logistics and transportation in specific areas affected by the heavy rain and floods,” it said.

CIMB Research said most contractors under its coverage do not have significant civil works and property/buildings orderbook exposure on Penang Island.

As for the property and REIT sectors, its channel checks with Mah Sing revealed that none of its Penang projects are affected by the flood.

Ecoworld Development said there was only a minimal impact on its projects in Penang. E&O's projects, Straits Quay Mall and E&O Hotel suffered mostly superficial damages and no incident was reported on site at STP2a.

“Our checks also revealed that the flood had no major impact on REITs under our coverage that have assets in Penang,” it said.

The research house noted the floods in Penang had delayed many aircraft takeoffs and landings at the Penang International Airport.

From our on-the-ground checks, the situation has returned to normal on Monday, with flights taking off and landing as scheduled.

The roads leading to the airport are also clear of flooding, and airline passengers can make their way to the airport for departure, or exit the airport upon landing.

Penang is Malaysia's second-largest airport in terms of international passenger traffic (2.8 million international passengers in 2016), second only to KLIA.

As a result, it is a reasonably important contributor to MAHB's profitability, as well as to AirAsia.

“While some passengers may delay their travel plans to Penang until the floods subside, we do not expect the impact on air travel demand to be long lasting.

“As such, the flood event in Penang is not expected to make a major dent in the overall financial performance of Malaysia Airports Holdings Bhd (MAHB) and AirAsia,” said the research house.