Westports to see double-digit container throughput growth
KUALA LUMPUR: Analysts are more positive on Westports Holdings Bhd’s (Westports) prospects and expect the port operator to record double-digit container throughput growth for the financial year 2019 (FY19).
In a company update, the research team at AmInvestment Bank Bhd (AmInvestment) said: “We like Westports as it has returned to its growth path following the loss of a major customer during a major reshuffling of the global shipping alliances in 2017.”
It also pointed out that a 13 per cent tariff hike effective March 1 this year will help lift its margins and earnings.
“We also believe that the seaport operator is a beneficiary of the trade diversion from the US-China trade war, as well as the improved China-Malaysia relations.
“China was one of Malaysia’s largest trade partner in 2018, contributing to 13 per cent of Malaysia’s total external trade,” it opined.
Meanwhile, on Westports’ container throughput growth, the port operator has raised its guidance for FY19F container throughput growth rate to double-digits from its singledigit guidance which was given during the results briefing in end-July 2019.
“We have anticipated this move by Westports.
“Our forecasts assume FY19F container throughput growth rate of 12 per cent.
“As such, we are maintaining our forecasts,” it said.
To recap, Westports registered a strong 22 per cent year-on-year increase in container throughput in 1HFY19, backed by the buoyant intra-Asia segment (that contributed about 63 per cent of its total container throughput volume in 1HFY19), and the trade diversion from the US-China trade war.
All in, AmInvestment pegged a ‘buy’ call on the stock.