14-05-2025
Westports earnings flow intact on long-term jobs
Westports reiterated its guidance for 0% to 5% volume growth in 2025.
PETALING JAYA: Westports Holdings Bhd is hoping the Port Klang Terminal Handling Charge (THC) hike will take place in the second half of 2025 (2H25).
However, CGSI Research believes the government may need to assess the impact of the US tariff hike on the country before giving the go-ahead.
If the THC hike is indeed implemented in 2H25, as anticipated by Westports, there is upside to its financial year 2025 (FY25) earnings forecast, said CGSI Research.
It was reported that the proposed 30% increase in port tariffs for container handling and storage will be implemented in phases over a three-year period.
The first phase will see a 15% hike, followed by 10% and then another 5% in the subsequent phases.
Westports reiterated its guidance for 0% to 5% volume growth in 2025, although it said that growth will most likely be at the bottom end of the range.
CGSI Research said container volumes so far in the second-quarter 2025 (2Q25) from April to the first week of May 2025 have grown year-on-year (y-o-y) in the 0% to 5% range, with gateway and transhipment volumes both growing.
UOB Kay Hian Research said Westports has yet to analyse in detail the impact of the tariffs. It is factoring in all negatives/risks and positive events with its mid-single digit volume growth target.
Hong Leong Investment Bank (HLIB) Research anticipates continued earnings growth on the back of sustained continued volume growth and an anticipated tariff hike in 2025.
It said the recently proposed five-year dividend reinvestment plan is expected to further enhance shareholder value.
TA Research said any shock after 90 days when the US tariff pause is over on July 8 would be muted.
CGSI Research has a 'hold' call on the stock with a target price (TP) of RM4.36 a share.
So does CIMB Securities Research, TA Research, Maybank Investment Bank Research and UOB Kay Hian Research with target prices (TPs) of RM4.50, RM4.72, RM4.78 and RM4.40 a share, respectively.
HLIB Research maintains its 'buy' call with a TP of RM5 a share, while Kenanga Research retains its 'market perform' call with a TP of RM4.40 a share.
The share closed at RM4.56 in yesterday's trading.
HLIB Research made minor adjustments to its FY25-FY26 earnings by a 0.6% rise and a 7.4% fall, respectively, and introduced FY27 earnings at RM938mil.
TA Research fine-tuned its FY25-FY26 earnings projections lower by 2.7% to 3.2% after incorporating the audited FY24 earnings into its forecast.
CIMB Securities Research said potential rerating catalysts for the stock include upcoming government-approved port tariff hikes, a recovery in transshipment cargo volumes and sustainable gateway volume growth.
The potential de-rating catalysts for the stock include a delay in the new port tariff revision by the government, escalation of geopolitical risks in North Asia and the Middle East affecting trade routes, and higher fuel costs.
Intra-Asia trade growth and regional realignment could partly cushion the impact of global trade uncertainties, CIMB Securities Research said.
Kenanga Research likes Westports for its resilient earnings underpinned by long-term contracts with key clients such as Ocean Alliance.
Its long-term growth prospect is driven by the Westports 2 expansion project, and its price competitiveness, ie, lower transhipment tariffs versus peers such as the Port of Tanjung Pelepas and Port of Singapore, the research house said.
