Westports to sustain earnings despite global trade slowdown
Hong Leong Investment Bank (HLIB) Research maintained its 'buy' call on the port operator, while raising its discounted cash flow (DCF)-derived target price to RM6.08 from RM5, following an upward revision to earnings forecasts. The revision reflected the approved port tariff adjustments granted by the Transport Ministry (MoT), aimed at supporting Westports' infrastructure investments and long-term growth.
'The tariff adjustment is essential to support Westports' ongoing infrastructure investments and ensure the sustainable growth and competitiveness of Port Klang,' said HLIB Research in its latest note. It added that earnings sustainability and resilient volume movements were likely, even amid concerns over a global trade slowdown.
HLIB Research lifted its earnings projections for Westports by 4.1% for the financial year ending 2025 (FY25), 18.4% for FY26, and 23.6% for FY27.
This followed assumptions on the phased tariff increases, which would commence on July 15, 2025.
The first phase involved a 15% hike for container handling services, followed by a 10% increase for container, conventional and marine services from Jan 1, 2026. A further 5% adjustment would take effect on the same segments later that year.
Westports operated at an optimal utilisation rate of 80% of its 14 million twenty-foot equivalent unit (TEU) capacity. Management projected mid-single-digit growth in container throughput until 2027, with new capacity expected to come online by mid-2028.
'We do not anticipate the expected global economic slowdown to significantly impact market expectations regarding Westports' near-term operational growth,' HLIB Research stated.
The research house also pointed to the company's Dividend Reinvestment Plan (DRP) as a positive for shareholders and expansion plans. It said: 'The proposed DRP is poised to enhance shareholder value, while supporting medium-term capex requirements.'
The DRP offered shares at a discount of less than 10% to the five-day volume weighted average price prior to the price fixing date, with major shareholders — including Pembinaan Redzai and its affiliate Semakin Ajaib, as well as South Port Invest — collectively committing to participate. These parties represented 69.1% of Westports' share capital.
Meanwhile, Westports pressed on with its major expansion programme, which aimed to double its handling capacity to 28 million TEUs through the development of container terminals, CT10 to CT17. Dredging and reclamation works for CT10 and CT11 were progressing, with construction slated to begin in the first quarter of 2027. CT10 was expected to commence operations by mid-2028, followed by CT11 at end-2029.
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