Hanjin’s woes will not hit Westports

> Bankrupt South Korean shipping line’s cargo volume is less than 3% of Malaysian port’s throughput: AmResearch

PETALING JAYA: The bankruptcy of South Korea’s Hanjin Shipping Co will not have a significant impact on Westports Holdings Bhd as its cargo accounts for less than 3% of the port’s throughput, said AmResearch.

Last Friday, Hanjin filed for bankruptcy protection in the US to protect its vessels from being seized by creditors after the rejection of its latest plan for dealing with a US$5.37 billion (RM21.9 billion) debt.

Hanjin,South Korea’s largest and world’s eighth shipping firm by capacity, reportedly represents nearly 8% of the Trans-Pacific trade volume for the US market.

As creditors earlier reportedly seized ships and terminal operators refusing to handle its cargoes, Hanjin’s collapse would be the largest container-shipping failure, compared with other carrier bankruptcies before this. Hanjin is required to submit its revival plan by Nov 25.

In a research report yesterday, AmResearch said Hanjin’s throughput at Westports comprised mainly gateway traffic. “We believe it would not have any significant impact on Westports, which has already been impacted by flat growth in imports and exports.”

For the first half of FY16, Westports’ gateway growth was flat at 0%, while transhipment grew at 15.2%, leading to a core profit of RM311 million (+28% year-on-year), which met expectations.

In Q2 alone, transhipment grew at a strong 21% year-onyear, as it benefited from more ad-hoc calls. Gateway volume was flat at 1.5%, for an overall container traffic growth of 15%.

While Westports has gained from ad-hoc calls by shippers, uncertainties remain over the shake-up in shipping alliances, which could result in traffic being shifted to Singapore, said AmResearch.

Westports’ management has said it will have greater clarity by October on how the Ocean Alliance will implement a twohub strategy in the region.

“Management continues to see positive growth for next year, while the exact impact of the alliance shake-up is still too early to tell for 2018,” AmResearch said.

It maintained a “hold” call on Westports with an unchanged target price of RM4.16. The counter gained 1 sen to RM4.41 yesterday, on 420,300 shares traded.