PETALING JAYA: The Intra-Asia trade lane is expected to drive the overall container volume growth for Westports Holdings Bhd
, according to MIDF Research.
The trade lane has been the key contributor to gateway container growth, with import and export volumes rising by 14% year-on-year (y-o-y) and 8% y-o-y, respectively, in the third quarter of financial year 2024 (3Q24).
“For this year, management has guided for low single-digit growth, which we estimate at 3.3% y-o-y, partly reflecting a potential recovery in transshipment volumes,” the research house said in a report yesterday.
It pointed out that container volumes could temporarily rise if shipments were frontloaded ahead of tariffs following Donald Trump’s US presidential transition, with the impact depending on the tariff scope.
For the nine-month period ended FY24 (9M24), Westports’ container volume totalled 8.1 million twenty-foot equivalent units (TEUs) or up by 1.2% y-o-y, accounting for 74% of MIDF Research’s full-year forecast.“Breaking it down further, the transshipment volume declined by 5.3% y-o-y, but this was largely balanced out by robust growth in gateway volume which increased by 10.3% y-o-y.
“Management expects FY24 container volume to end flat, revising its earlier low single-digit growth guidance due to shifts in transshipment congestion and subdued market conditions.
“We estimate that 4Q24 container volume could range between 2.7 million TEUs and 2.9 million TEUs,” the research house said.
Meanwhile, Westports’ container revenue growth (up by 7.1% y-o-y in 9M24, despite subdued volumes) has been driven by value-added services (VAS) and higher-yielding gateway volumes.
MIDF Research said yard occupancy, which hit its bottleneck in June last year following the Red Sea crisis, has reportedly eased below 80% but remains above the ideal 65% seen in December 2023.
The research house said this suggests that VAS contributions could stay elevated in 4Q24 despite normalising.
“The VAS ratio rose to 25% in 3Q24, up from 22% in 2Q24, surpassing its usual mid-to-high teens range.
“Recall that gateway TEUs hit record highs in 3Q24, with the gateway-to-transshipment ratio shifting to 46:54 from the historical 30:70 split.
“Gateway volumes are expected to remain strong, though growth may start to normalise,” the research house said.
It maintained a “neutral” call on Westports with a target price of RM4.30.
The research house said key potential upsides include a tariff hike expectation or a positive revision in container volume growth guidance.
