This article first appeared in The Edge Financial Daily on January 23, 2019

KUALA LUMPUR: Interest in the shares in port operator Westports Holdings Bhd has ramped up since the turn of the new year as a planned 15% increase in container tariff looms nearer.

The counter has risen 6.9% from RM3.65 on Jan 2 to close at RM3.90 yesterday, bringing a market capitalisation of RM13.3 billion. Its stock price hit a peak of RM3.93 last Friday — its highest since April 4, 2017.

On Aug 10 last year, Transport Minister Anthony Loke announced that the second phase of the increase in Port Klang’s container tariff, initially scheduled for Sept 1, 2018, will be deferred to March 1 this year.

The move was to “give more time for port users and other industry players to adapt and stabilise their businesses, following the implementation of the sales and services tax” in September 2018.

However, in a note to investors on Jan 17, AmInvestment Bank Research highlighted the possibility of another deferment of the 15% hike in Port Klang’s container tariff.

“Our conservatism is premised on the Pakatan Harapan government’s commitment towards containing the rising cost of living. A higher container tariff will increase the overall cost of imports, which will filter down to higher cost of imported goods for consumers. Similarly, a higher container tariff will raise the overall cost of exports, eroding competitiveness of Malaysian exporters,” the research firm said.

“The market (AmInvestment Bank Research included) seems to hold the view that the government may kick the can down the road again,” it added.

AmInvestment Bank Research has a “hold” call on Westports, with a fair value of RM3.74.

Bloomberg’s data showed that out of the 18 analysts that cover Westports, three have a “buy” call, 12 a “hold” and three are calling a “sell”, with target prices ranging between RM3.40 and RM4.20.

The review of Port Klang’s container tariff is made through the Port Klang Authority (Scale of Rates, Dues and Charges) (Amendment) By-Laws in 2015, while the increase in tariff charges by 30% will be carried out in two phases.

The first phase of a 15% tariff increase was on Nov 1, 2015, with the next phase three years later.