Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily on April 30, 2019

Westports Holdings Bhd
(April 29, RM3.80)
Maintain hold with an unchanged fair value of RM3.91:
Westports Holdings Bhd’s first quarter of financial year 2019 (1QFY19) net profit came in within expectations at 24% and 23% of our full-year forecast and consensus estimates respectively. 1QFY19’s container volume grew 12% year-on-year (y-o-y) thanks to: i) growth in intra-Asia trade lane; ii) recovery from the Asia-Europe trade lane as the impact of shipping alliances reshuffling gradually subsides; and iii) some market share gained from Northport.

The management reiterated its guidance for 3% to 8% growth in container volume in FY19, while we maintain our assumption of 4%. We expect the cumulative y-o-y container volume growth to ease as the year progresses as the low base effect in FY18 (due to the negative impact of the reshuffling of the global shipping alliances) gradually wears out.

1QFY19 net profit increased by 13% y-o-y, thanks to the double-digit growth in container volume and implementation of container tariff hike with effect from March 1, 2019.

As mentioned, we remain “neutral” on Westports due to slowing global growth. However, there is a potential upside from stronger-than-expected global trade activities resulting from favourable US-China trade deal, coupled with increased trade activities between Malaysia and China following the improved relations between the two countries recently. China was one of Malaysia’s largest trade partners in 2018, contributing to 13% of Malaysia’s total external trade. — AmInvestment Bank, April 29

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