Westports revving up plans despite tougher competition
KUALA LUMPUR: Westports Holdings Bhd (Westports) will continue to jack up its performance and capacity in spite of declining volumes and heightening competition.
According to Affin Hwang Investment Bank Bhd (AffinHwang Capital), this comes as cargo throughput especially for transhipment cargo at Port Klang was affected by the consolidation of the shipping industry and shift in shipping alliances.
To note, Westports was affected by Hapag-Lloyd and CMA’s shift in transhipment cargo handling to Port of Singapore. As a result, transhipment cargo handling volume fell 13 per cent y-o-y to 4.76 million twenty foot equivalent units (TEUs) in 9M17.
“Overall container handling volume declined eight per cent y-o-y to 6.8 million TEUs, the decline was partly offset by gateway volume growing eight per cent y-o-y to 2.04 million TEUs in 9M17,” AffinHwang Capital said in a note.
“We gather that volumes could remain weak in the first half of next year as the impact of the shift in transhipment cargo handling by some of its major customers continue to be felt.
“We expect a recovery in volume growth in 2H18.”
To note, Northport is pursuing long-term plans to expand port capacity and industrial development on Carey Island, while Westports plans to double its capacity by expanding its container terminal facilities (CT10 to CT19).
“We gather that MMC Corp plans to team up with Sime Darby Plantation (land owner) and Sime Darby Property (developer) to develop Carey Island into a mixed development project with an industrial and logistics park and a fully-automated port with potential cargo handling capacity of 30 million tonnes per annum,” the research house noted.
“The three-phase development could be over 30 years. With total area of 100 square kilometres, Carey Island provides the hinterland to support the development of a new port, which could start in 2021 and be commissioned in 2025.
“The development of the port could involve foreign partners. These plans are still at a preliminary stage and is pending the approval of the government.”
Meanwhile, Westports new CT8 was completed in August 2017 and CT9 Phase 1 will complete in December 2017.
With the added wharf and new fleet of Terminal Operating Equipment at CT8, Affin-Hwang Capital saw that Westports’ total container handling capacity increased to 13 million TEUs per annum.
“It has also received an approval-in-principle for proposed expansion of container terminal facilities under CT10 to CT19, which could expand its capacity to 30 million TEUs by 2040.
“We estimate the cost of development is RM12 billion to RM13 billion assuming RM1 billion cost per terminal and RM2 billion to RM3 billion land reclamation cost.”
Overall container handling volume declined eight per cent y-o-y to 6.8 million TEUs, the decline was partly offset by gateway volume growing eight per cent y-o-y to 2.04 million TEUs in 9M17. AffinHwang Capital