- We maintain BUY on Westports, with an unchanged DCFderived fair value of RM3.40/share. This implies a forward PE of 22x on FY15F earnings.

- Westports yesterday announced a core net profit of RM140.9mil for 3QFY14 (+20% YoY; +15% QoQ), bringing the 9MFY14 earnings to RM372.4mil (+18% YoY), which account for 75%-76% of our and consensus forecasts.

- This is in line with expectations, but with an upside bias to our projection. The last quarter is traditionally its strongest period in absolute terms. It expects 4Q14 to show a lower volume growth vis-a-vis 12% YoY for YTD Sept, but still at a high-single digit, due to the strong volume a year earlier.

- No dividends were declared, except for the 5.1 sen/share paid out for the previous quarter. The effective tax rate was 14.7% for 9MFY14 vs. 21% for 9MFY13. Note that our effective tax rate assumption is 16% for FY14F.

- In 3QFY14, container volume grew 3% QoQ and 11% YoY to 2.16mil TEUs. Gateway and transhipment volume rose by 12.1% and 11.0% YoY, respectively. For 9MFY14, throughput grew by 12.4% YoY to 6.18mil TEUs, with a 12.7% rise for transhipment and +11% for gateway. Our growth forecast for the full year is at 8.3%. The company now expects growth of 9%-11% for FY14.

- Westports yesterday announced that it will start in early 2015 the construction of CT8, which will bring up capacity to 13.8mil TEUs (from 11mil TEUs) by mid-2017 when it is fully operational. Our current assumption is for capacity to rise to 13.5mil TEUs by FY17F and to 16mil TEUs by 2020.

- Utilisation has reached the trigger point of 80% even with the completion of CT7, which will be fully operational by month-end. Westports will invest RM1bil over 2015-2017, to be funded via internal funds and drawdown of Sukuk. For 2015, capex will be at RM400mil. This in line with our projections.

- Volume hit a new historical high of 739,000 TEUs last August, eclipsing the previous mark of 719,000 TEUs in May. Westports expects the proposed Ocean Three (O3) Alliance to start operations in January 2015 and the 3-member liners to reaffirm their commitment in using the port as their key regional shipping hub.

- We had yesterday upgraded the stock to a BUY given that the risk bias is skewed to the upside. We recap our views in the following pages.

Source: AmeSecurities