Westports Holdings Berhad - 1Q25 within expectations
Tue, 13-May-2025 07:27 am
by Jayden Tan • Apex Research

Counter

WPRTS (5246)

Target Price (RM)

5.08

Recommendation

Buy

  • Westports reported 1QFY25 core net profit in line with expectations, accounting for 25% of our and consensus full-year forecasts.

  • YoY, CNP rose 9%, aided by lower operational costs (-3%) from weaker oil prices and reduced depreciation (-7%) following the concession period extension. QoQ, CNP fell 13%, reflecting seasonally lower revenue (-4%) and higher administrative costs related to Westport 2 expansion.

  • Maintain BUY with an unchanged TP of RM5.08, based on DCF-derived (6.2% discount rate), supported by resilient Intra-Asia trade and potential port tariff hike in 2026.

 

Results within expectations. 1QFY25 came within expectations, accounting for 25% of our and consensus full-year estimates.

 

YoY. CNP rose 9% yoy, supported by a 14.4% increase in revenue to RM621.3m. Growth was driven by a 5% yoy rise in container revenue (RM493m), supported by higher storage charges from longer dwell times due to stricter inspections on metal and e-waste, alongside a 7% increase in conventional volume to 2.95m MT, benefiting from liquid bulk and steel cargoes. Profit margins also improved, aided by a 3% decline in operational costs due to lower fuel expenses (-11%), driven by weaker oil prices, and reduced depreciation costs (-7%) following the extension of the concession period.

 

QoQ. CNP declined 13% qoq, reflecting a seasonally lower revenue base (-4% qoq), primarily due to fewer gateway TEUs (-7%), impacted by stricter import inspections targeting illegal imports, particularly e-waste, as well as seasonal effects from Ramadan and Hari Raya during the period. The decline was also compounded by a high base effect from the front-loading activities in the previous quarter. Gross profit fell 6% qoq to RM381m, reflecting lower cargo handling and storage revenue, alongside higher administrative and operating expenses related to the Westport 2 expansion.

 

Outlook. We expect moderate volume growth in FY25, underpinned by resilient Intra-Asia trade and supported by Malaysia’s commitment to multilateral trade through government initiatives, despite ongoing uncertainties from the Trump tariff negotiations. Additionally, we anticipate that the port tariff rate hike may be finalised by the government later this year, potentially taking effect in 2026, providing a further revenue uplift. The Westport 2 expansion remains on track, with operations expected to commence in 2028, supporting long-term growth potential.

 

Earnings Revision. We maintain our earnings forecasts for FY25F and FY26F, as current performance aligns with our expectations.

 

Valuation. We reiterate our BUY recommendation on Westports, with an unchanged target price of RM5.08, based on the DCF-derived methodology, applying a 6.2% discount rate.

 

Risk. Key risks include uncertainties surrounding Trump’s trade policies, stiff regional competition, and potential delays in the Westport 2 expansion.

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Market Mover
Settlement Rates
Currency Buy Rates (RM) Sell Rates (RM)
USD 4.203518 4.236873
EUR 4.944847 4.949827
CNY 0.591811 0.592408
HKD 0.539572 0.543369
SGD 3.274410 3.297453