PETALING JAYA: Westports Holdings Bhd
is maintaining its guidance for low single-digit container throughput growth in 2026 despite the ongoing Iran war.
The port operator’s container throughput declined 1.1% year-on-year in the first quarter ended March 31, 2026 (1Q26), with transshipment volume rising 0.7% while gateway cargo fell 3.4%.
The weaker performance was mainly due to a shorter working month and the preliminary impact of the conflict.
However, the container volume had rebounded to 3% in April.
According to Hong Leong Investment Bank (HLIB) Research, Westports’ management indicated that there has been no significant impact from the Iran war thus far.
The research house – which has upped the stock’s target price to RM7.15 from RM6.55 – expects earnings growth to remain sustainable, supported by tariff hikes and resilient volume growth despite the geopolitical tensions.
In addition, the group’s dividend reinvestment plan is expected to enhance shareholder value, while helping to support its medium-term capital expenditure needs.
In 1Q26, Westports reported a strong core profit after tax and minority interest, with earnings coming in above both HLIB Research’s and consensus’ full-year expectations at 28.4% and 29.7%, respectively.
According to the research house, the earnings growth was primarily driven by the additional 10% tariff hike implemented in January 2026, following the earlier 15% increase in July 2025.
However, it noted that fuel costs increased significantly following the sharp rise in diesel prices since March.
“Nevertheless, diesel prices have recently started to trend lower, and management does not foresee any risk of supply disruptions. On a positive note, management has secured 60 electric trucks, representing about 10% of its fleet, with deliveries scheduled for June and July 2026.”
The introduction of the e-trucks is expected to improve the group’s fuel cost structure in the second half of financial year 2026, said HLIB Research.
On the Westports Phase 2 expansion, construction progress for Container Terminals (CT) 10 to 13 was slightly ahead of schedule at 56% completion, to date.
CT10 is expected to begin operations in 3Q28 for Wharf 1 and in 4Q28 for Wharf 2, while CT11 is slated for completion in 4Q29 and 1Q30, respectively, the research house added.
Meanwhile, RHB Research said it believes that the conflict-related risks have largely been priced in.
“Westports is trading at 15.9 times price-to-earnings, and we continue to see upside potential should the government establish a fuel cost pass-through mechanism, although the timeline remains unclear for now,” the research house said in a note to clients.
According to Westports, the Transport Ministry is considering a request by ports in Malaysia to implement a diesel cost pass-through formula.
In 1Q26, the group’s fuel costs were higher by 17%, mainly attributed to a roughly 33% hike of the Mean of Platts Singapore price to US$121.7. The impact, however, was partially mitigated by a stronger ringgit and lower fuel consumption.
“Fuel accounted for 19% of the total operating expenditure in 1Q26 (versus 23% in 2022 due to the Russia-Ukraine war).
“Moreover, fuel consumption is expected to ease by approximately 10% in 4Q26 following the deployment of 60 e-trucks by 3Q26,” RHB Research said.
It noted that Westports is exempted from the Automatic Fuel Adjustment mechanism, barring any rising electricity costs due to the Middle East war.
“The congestion issues observed in January this year have been fully resolved, with its yard density rate now hovering at a healthy 70% to 80% level.
“Consequently, we maintain our throughput growth forecast of 4.5%, within management’s unchanged guidance of low single-digit growth,” the research house added.
An analyst said the stock is currently valued in line with its long-term historical average.
