• Westports has raised its guidance for FY19F container throughput growth rate to double-digits from its single-digit guidance which was given during the results briefing in end-July 2019.
• We have anticipated this move by Westports. Our forecasts assume FY19F container throughput growth rate of 12%. As such, we are maintaining our forecasts. To recap, Westports registered a strong 22% YoY increase in container throughput in 1HFY19, backed by the buoyant intra-Asia segment (that contributed about 63% of its total container throughput volume in 1HFY19), and the trade diversion from the US-China trade war.

• We maintain our FV of RM4.73 based on 23x FY20F EPS, in line with its average 5- year historical forward P/E.

• We like Westports as it has returned to its growth path following the loss of a major customer during a major reshuffling of the global shipping alliances in 2017. A 13% tariff hike effective 1 March this year will help lift its margins and earnings.

• We also believe that the seaport operator is a beneficiary of the trade diversion from the US-China trade war, as well as the improved China-Malaysia relations. China was one of Malaysia’s largest trade partner in 2018, contributing to 13% of Malaysia’s total external trade. Mataintain BUY

Source: AmInvest Research - 11 Sept 2019