Westports sails strong despite global headwinds
The firm said Westports is currently operating at an optimal utilisation rate of 80 per cent of its 14 million twenty-foot equivalent unit (TEU) capacity.
The port operator has indicated expectations of mid-single-digit growth in container throughput through to 2027, with additional capacity projected to come online by mid-2028.
"As such, we do not anticipate the expected global economic slowdown to significantly impact market expectations regarding Westports' near-term operational growth," HLIB said in a research note.
It maintained a "buy" call on Westports with a higher target price of RM6.08 from RM5 previously, post-earnings revision to account for the approved tariff hikes.
"We expect earnings sustainability and resilient volume movements, despite concerns over global trade slowdown.
"Also, the proposed dividend reinvestment plan (DRP) is poised to enhance shareholder value while supporting medium-term capital expenditure requirements," it said.
Westports has implemented a DRP, offering shares at a discount of less than 10 per cent to the five-day volume-weighted average market price prior to the price-fixing date.
The DRP proceeds will help support the company's ongoing expansion plans while maintaining its strong financial standing.
"Major shareholders, including Pembinaan Redzai along with its affiliate Semakin Ajaib, and South Port Invest, have committed to participate in the DRP, collectively representing 69.1 per cent of the company's total share capital," it added.
On the port tariff hike, HLIB said the increase will improve Westports' earnings and cash flow and, together with its DRP, support the financial sustainability of its ongoing expansion plan.
The Transport Ministry has approved port tariff hikes for Westports, effective July 15, 2025, which will be implemented in stages until January 1, 2027.
Container handling charges are expected to jump by 30 per cent, while conventional and marine services will increase by 15 per cent.
On capacity expansion, Westports is currently executing a major expansion plan to double its container handling capacity to 28 million TEUs, covering the development of terminals CT10 to CT17.
HLIB said the initial phase, CT10 and CT11, is progressing well, with dredging and land reclamation works already underway.
"Construction is scheduled to begin in the first quarter of 2027, with CT10 expected to be operational by mid-2028 and CT11 by the end of 2029.
"The recently approved tariff revision and the implementation of DRP will ensure the financial sustainability of these long-term expansion efforts," it added.
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