This article first appeared in The Edge Financial Daily on November 13, 2019

Westports Holdings Bhd
(Nov 12, RM4.23)
Maintain buy with an unchanged fair value (FV) of RM4.81: Westports Holdings Bhd disclosed a collision of a berthing container vessel with two ship-to-shore cranes at Westports in Port Klang on Nov 8, 2019. The company has closed two berths to assess damages and is currently investigating the contributing factors that led to the incident. Westports said “the container vessel concerned and affected assets have insurance coverage”.

We expect minimal impact on earnings for Westports from the incident. The two berths’ temporary closure is not expected to have any material impact on operations as all other berths continue as usual. Westports currently has 20 container berths and 67 ship-to-shore cranes.

We like Westports as it had returned to growth following the loss of a major customer during the global shipping alliances’ major reshuffling in 2017. A 13% tariff hike effective March 1 this year will help lift its margins and earnings.

We also believe the seaport operator is a beneficiary of the trade diversion from the US-China trade war, as well as an improved China-Malaysia relations.

We maintained our FV of RM4.81 based on 23 times financial year 2020 forecast earnings per share, in line with its average five-year historical forward price-earnings. — AmInvestment Bank, Nov 12