Analysts have adjusted the company’s earnings forecasts from this year (FY25) to FY27.
PETALING JAYA: The staggered revision of container charges in Port Klang gazetted on June 13 is seen as positive for port operator Westports Holdings Bhd
for the higher revenue, although the reliance on transshipment volume that is sensitive to external factors and competition from regional peers remains as risks.
Analysts were in general positive on the higher container charges and have adjusted the company’s earnings forecasts from this year (FY25) to FY27 given the 15% hike in container charges from July 15 this year, a 10% hike from January next year and a further 5% hike from January 2027.
BIMB Research, which has maintained a “hold” call on the stock but raised the target price to RM5.25 from RM4.65, said the company still faces challenges such as its heavy reliance on transshipment volumes sensitive to global trade shifts and rising geopolitical tensions in the Middle East, Taiwan Strait and South China Sea that could disrupt shipping routes.
Additionally, competitive pressure from regional peers such as the Port of Singapore Authority and Port of Tanjung Pelepas has been growing, while shipping lines may resist the higher charges, especially in a weak freight rate environment by seeking discounts or rerouting cargo.
The research house, which noted that revision was long overdue, said the revision would raise container charges to RM390 per 20-foot equivalent unit from RM300 and align Port Klang’s rates closer to Singapore and Hong Kong but above regional peers such as Vietnam, Indonesia, and Thailand.
Maybank Investment Bank Research has upgraded the stock to “buy” from “hold” and lifted the target price by 22% to RM5.84 but cautioned that the impact from the revision would be gradual on Westports’ revenue due to the structure of the customer contracts, which include transhipments, that span two to three years on average.
Furthermore, the research house sees the higher charges as more effectively reflecting land use costs and discouraging exporters from using the port as a storage ground for idle containers, while the rise from storage charges, which has not been factored into the revised earnings forecast, could provide further upside.
It has maintained a container growth forecast of 2% for FY25 to FY27 underpinned by steady intra-Asia trade but pointed out that a weaker global trade outlook, prolonged geopolitical tensions affecting transhipment flows and persistent yard congestion continue to be key risks for the company.
TA Research has also upgraded the stock to “buy” from “hold” and revised the share price to RM5.57 from RM4.72.
The research house said that the adjustment to container charges would help the company maintain its AAA sukuk rating as the proceeds would be used to finance the Westports 2.0 expansion plans.
