Westports earnings outlook bright on container growth, tariff gains
Despite on-going uncertainties on global trade and economies, HLIB said Westports maintains its guidance of mid-single digit growth for container throughput in 2025, after achieving 3.1 per cent growth in 1H25.
The bank noted that Westport has not seen any meaningful change in on-going volume and future volume as major liners have not changed their port calling.
"The approved tariff hike effective July 15, 2025, Jan 1, 2026 and July 1, 2027, will improve the group's cash flow and partly fund WP2 expansion plan.
"Furthermore, the approved five years dividend reinvestment plan (DRP) will be used to partly finance WP2 (Westports 2) as well.
"Management is committed to continue its 75 per cent dividend payout policy," it said.
Meanwhile, HLIB said Westports reported another strong performance for the second quarter of financial year 2025 with net profit of RM232.2 million, lifting 1H25 to RM454.7 million.
This was within HLIB's and the consensus full-year forecasts of 49.5 per cent and 48.4 per cent, respectively.
"The growth was mainly driven by higher container value-added services revenue and rental rate.
"At current juncture, management is retaining its guidance of mid-single digit growth for container throughput in 2025, post achieving 3.1 per cent in 1HFY25.
"Maintain Buy rating with an unchanged target price of RM6.08," it added.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Straits Times
13 hours ago
- New Straits Times
HLIB raises Frontken's FY2025, FY2026 earnings on higher margin assumptions
KUALA LUMPUR: Hong Leong Investment Bank (HLIB) raised its financial year 2025 (FY 2025) and FY2026 earnings forecasts of Frontken Corporation Bhd by 16 per cent to 19 per cent, mainly to reflect higher margin assumptions. In a research note, HLIB said net margins of 28 per cent to 29 per cent are now expected, up from 23 to 25 per cent previously. The investment bank said Frontken reported a strong core net profit of RM52 million in the second quarter of 2025 (2Q 2025), a 73 per cent increase quarter-on-quarter and 61 per cent year-on-year, ahead of their expectations, but still within consensus. "The beat was driven by net margin expansion to 33 per cent in the 2Q 2025, from 23 per cent in 1Q 2025, underpinned by a more favourable product mix, operational efficiency gains, and operating leverage. "We believe continued delivery on these fronts, backed by strong institutional interest, could absorb the incremental share overhang from warrant conversion and support a re‐rating beyond the RM4.00 range," it said. HLIB said it has upgraded Frontken to a "buy" from "hold", with a revised target price of RM4.95. On prospects, the investment bank said it remained positive on Frontken's growth, underpinned by structural semiconductor tailwinds from artificial intelligence (AI)-driven demand, ongoing migration to leading-edge nodes, and robust foundry capex spending. HLIB said the company's solid balance sheet (net cash of RM509 million or 32 sen per share) will help support expansion plans in Taiwan, Singapore, and the United States.
The Star
2 days ago
- The Star
Strong 2Q showing forecast for planters
PETALING JAYA: Plantation companies will likely report another decent set of performance on a quarter-on-quarter (q-o-q) basis in the upcoming second quarter of financial year 2025 (2Q25) results season, despite anticipation of mixed sequential improvement. Hong Leong Investment Bank (HLIB) Research in its 2Q25 results preview expects planters' performance to be supported by a recovery in the fresh fruit bunch (FFB) output amid relatively stable palm oil prices. On a q-o-q basis, the brokerage firm expects plantation companies under its coverage to record FFB output growth ranging from 3.5% to 46%, driven primarily by seasonal factors and more conducive weather conditions. 'Despite the broad-based increase in FFB production, upstream earnings performance was likely mixed, as the output growth registered by some of the planters (such as TSH Resources Bhd and Hap Seng Plantations Holdings Bhd ) were not sufficient to mitigate the q-o-q decline in crude palm oil (CPO) prices and the full cost effect of the minimum wage hike implemented since February 2025,' it pointed out. On the other hand, downstream segment earnings are expected to improve sequentially. 'This will be supported by a narrower export tax and levy differential between Malaysia and Indonesia, and lower feedstock costs, particularly for both CPO and crude palm kernel oil,' added HLIB Research. On a year-on-year (y-o-y) basis, the brokerage firm expects planters to report flattish upstream earnings in 2Q25, as broadly higher FFB output – amid flattish CPO prices – is likely offset by higher labour costs following the minimum wage hike implementation. 'During the quarter, seven out of eight planters under our coverage recorded y-o-y increases in FFB output, primarily driven by yield normalisation,' the brokerage firm said. Note that some planters were impacted by biological tree stress and a shift in cropping patterns last year. As for downstream segment earnings, it could potentially weaken in 2Q25 due to the high earnings base effect CPO export tax and duty differential between Malaysia and Indonesia, along with high palm kernel prices, which will likely curtail margin for oleochemical products. HLIB Research has maintained its 2025-2026 CPO price assumptions of RM4,200 per tonne and RM4,000 per tonne, respectively. It said ample near-term supply of vegetable oils (in particular, CPO and soybean) will cap the near-term CPO price (possibly until 3Q25), before turning more upbeat in 4Q25. Year-to-date, the CPO price has averaged at RM4,342 per tonne. The brokerage firm has kept a 'neutral' stance on the plantation sector due to the lack of significant near-term CPO price re-rating catalysts. For exposure, its top 'buy' picks are IOI Corp Bhd with a target price of RM4.12 and SD Guthrie Bhd with a target price of RM5.15. Meanwhile, HLIB Research has ceased coverage on FGV Holdings Bhd , as the Federal Land Development Authority's stake in FGV had exceeded the minimum 90% threshold and its listing status will be withdrawn from the Main Market of Bursa Malaysia. 'As such, our earnings forecasts, target price of RM1.30 and 'hold' rating should no longer be used as a reference going forward,' it noted.
New Straits Times
3 days ago
- New Straits Times
Westports earnings outlook bright on container growth, tariff gains
KUALA LUMPUR: Westsport Holdings Bhd is expected to continue earnings expansion on the back of sustained volume growth and container tariff hike in the second half of financial year 2025 (2H25), said Hong Leong Investment Bank Bhd (HLIB). Despite on-going uncertainties on global trade and economies, HLIB said Westports maintains its guidance of mid-single digit growth for container throughput in 2025, after achieving 3.1 per cent growth in 1H25. The bank noted that Westport has not seen any meaningful change in on-going volume and future volume as major liners have not changed their port calling. "The approved tariff hike effective July 15, 2025, Jan 1, 2026 and July 1, 2027, will improve the group's cash flow and partly fund WP2 expansion plan. "Furthermore, the approved five years dividend reinvestment plan (DRP) will be used to partly finance WP2 (Westports 2) as well. "Management is committed to continue its 75 per cent dividend payout policy," it said. Meanwhile, HLIB said Westports reported another strong performance for the second quarter of financial year 2025 with net profit of RM232.2 million, lifting 1H25 to RM454.7 million. This was within HLIB's and the consensus full-year forecasts of 49.5 per cent and 48.4 per cent, respectively. "The growth was mainly driven by higher container value-added services revenue and rental rate. "At current juncture, management is retaining its guidance of mid-single digit growth for container throughput in 2025, post achieving 3.1 per cent in 1HFY25. "Maintain Buy rating with an unchanged target price of RM6.08," it added.
