Highlights

Bimb Research Highlights

Author: kltrader   |   Latest post: Fri, 3 Apr 2020, 5:07 PM

 

Westports - Coronavirus Outbreak Threatening FY19 High Achievement

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  • Overview. Westports’ 4Q19 revenue improved to RM452.8m (+8.3% yoy). This was due to i) higher container volume (+9.3% yoy) supported by higher Intra-Asia trade lanes as well as additional service from Ocean Alliance and ii) container tariff hike. Core PBT (excluding impairment for vessel incident) increased 9% yoy due to stronger revenue and overall cost efficiency. For FY19, revenue and core PBT increased by 10.4% and 18% respectively.
  • Key highlights. FY19 registered a record high container volume growth of 14.1% (transhipment: +16.2%, gateway: +10%) mainly due to stronger Intra-Asia (+17%) and Asia-Europe (+33%) performance (refer table 3). We believe the increase in Intra-Asia could be due to ongoing growth in Southeast Asian economies as well as greater trade flow from China’s redistribution of its manufacturing facilities to neighbouring countries.
  • Against estimates: inline. FY19 core net profit was inline with our and consensus forecast at 100% and 101%.
  • Dividend. A 6.26 sen DPS was declared, bringing a total FY19 DPS of 13 sen and dividend yield of 3.3%.
  • Outlook. Despite registering a record year performance in FY19, we are cautious on Westport outlook on the back of current coronavirus epidemic disrupting global trade. Given the possibility of global trade activities and GDP softening together with China slowdown, we have revised down our earnings forecast for FY20/FY21 by 5%/3% respectively. (refer table 2)
  • Our call. Downgrade to HOLD with lower TP of RM4.40 (from RM4.80) based on DDM methodology (Ke: 8.8%, TG: 5.5%). Our call is based on concern regarding uncertainty from the coronavirus impact in the near term. Over the long term, we still like Westports due to its stable business model that combines an attractive high yielding local cargo and volumecentric transhipment as well as stable dividend payout of 75%.

Source: BIMB Securities Research - 10 Feb 2020

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