This article first appeared in The Edge Financial Daily on January 5, 2018

KUALA LUMPUR: Westports Holdings Bhd expects container throughput growth to be flat or slightly higher this year than in 2017 when it registered a 9.5% decline, as the effects of the changes to global shipping alliances remain.

Westports chief executive officer Ruben Emir Gnanalingam said a return to the days of growth is only expected in 2019.

“We expect this year to have flattish growth compared with 2017, with real growth restarting in 2019,” he told The Edge Financial Daily via email yesterday.

He revealed that factors such as a growing indigenous containerised cargo and the tapering of the effects of the changes from the alliances since the middle of 2017 will help to hold up container handling volumes this year.

“We are focused on continually delivering great performances for our customers. Aside from that, we would be focused on getting our expansion plans on track,” Ruben added.

Westports recorded a 9.5% decline in container throughput to 9 million TEUs (20ft equivalent units) last year from 9.95 million TEUs in 2016 as two of its major customers, namely French liner CMA CGM and United Arab Shipping Co (UASC), moved cargo to Singapore following various mergers and acquisitions. The terminal handled a record container volume of 9.95 million TEUs in 2016, which was an improvement of 10% over the previous year’s 9.05 million TEUs — also a record volume then.

“The reduction in [2017] volume compared with 2016 was all from transshipment activities. Local volume actually grew in 2017,” said Ruben.

In its conference call for analysts and investors on Wednesday, Westports said its indigenous cargo rose 10% year-on-year (y-o-y) in 2017.

The terminal operator also said a 2% to 3% y-o-y growth in container throughput is possible in 2018.

As for conventional cargo handled last year, Ruben said it was typically quite flat y-o-y as it was all derived from local cargo. “We typically handle 10-11 million tonnes every year,” he added.

CIMB regional transport head Raymond Yap said, during the conference call, Westports had guided that its container volume for the first quarter of 2018 (1Q18) may fall by as much as 10% y-o-y since the Ocean Alliance only took effect on April 1, 2017, and it would be relatively flat y-o-y in 2Q18.

“Strong growth [is expected] to resume in the second half of the year,” he said. “We have not changed our 0.2% y-o-y volume growth forecast for 2018, but note that the risks are to the upside.”

MIDF Research analyst Adam Mohamed Rahim is adjusting downwards its earnings forecast for Westports slightly for the financial year ended Dec 31, 2017 (FY17) to RM570 million from RM575.4 million previously as it incorporates the management’s guidance on the 9.5% decline in container throughput volume in 2017.

“The management believes that FY18’s overall container throughput would increase by between 2% and 3% y-o-y. Meanwhile, we are slightly optimistic, forecasting a 5.2% y-o-y increase in throughput volume in FY18,” Adam said.

He is maintaining a “neutral” call on Westports, with a reduced target price of RM3.83 per share.

Westports shares closed down 2 sen or 0.53% at RM3.73 yesterday, bringing a market capitalisation of RM12.72 billion.