Westports Holdings Berhad - Port tariff hike officially implemented
Mon, 16-Jun-2025 07:58 am
by Jayden Tan • Apex Research

Counter

WPRTS (5246)

Target Price (RM)

5.08

Recommendation

Buy

Revised tariffs officially implemented after a decade. The Port Klang Authority has officially gazetted the long-awaited tariff revision, marking the first adjustment since 2018 and nearly a decade after the initial proposal in 2015. The by-law was announced on 15 Jun 2025 and, while legally effective from that date, operational implementation is expected to commence from 15 Jul 2025, allowing port users a brief window to update billing systems and operational processes.


Details of the tariff adjustments. Under the revised schedule, port charges will be progressively increased over three years. As an illustration, the 20ft gateway full container load (FCL) rate will rise from RM300 currently to RM345 in July 2025 (+15%), followed by RM375 in 2026 (+9%) and RM390 in 2027 (+4%), representing a cumulative increase of 30%. For transhipment FCL rates will increase from RM182 to RM209.30 in 2025, RM227.50 in 2026, and RM236.60 in 2027, following the same 15%-9%-4% increment structure. These figures are provided as reference for 20ft containers; other container sizes (e.g., 40ft and empty boxes) and services, including conventional cargo handling and marine operations, will adopt a similar tiered adjustment, resulting in a uniform 30% increase across key categories by 2027.


Market has largely priced in the adjustment. The tariff revision had been widely anticipated, following prior guidance from authorities and management briefings. As such, we believe this implementation will not prompt any immediate re-rating of the stock. While a slight cargo diversion risk exists, particularly for transhipment volumes, the overall impact is expected to be minimal, given that the revised transhipment charges (approximately USD60/TEU by 2027) are comparable to or slightly lower than Singapore’s ports. Additionally, terminal handling charges account for only a small fraction of total business costs, which limits the incentive for shipping lines to shift volumes solely based on tariff differentials.


Strategic alignment with Westports growth plan. We are positive on the revision, as it aligns with Westports’ long-term strategic direction and enhances the group’s earnings visibility. The additional revenue from higher tariffs will support the Westports 2 capacity expansion, including CT10, which is targeted for completion by 2028 and will strengthen the port’s position as a key regional hub.


Earnings Revision. No changes are made to our earnings forecasts, as the expected tariff revision has already been incorporated into our existing projections.


Valuation. We reiterate our BUY call on Westports with an unchanged target price of RM5.08, based on a DCF methodology applying a 6.2% discount rate. However, we note that the upside is now limited, as the market has likely priced in the anticipated tariff hikes.

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

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