· We maintain BUY on Westports, with an unchanged DCFderived fair value of RM4.79/share, representing 27x FY16F PE. The key takeaways from Friday’s analyst briefing are as follows:-

· 1. It is still too early to determine the impact of impending and potential M&As in the shipping industry on container throughput at Westports.

· Specifically, Westports management was asked about reports that Singapore-listed Neptune Orient Lines has entered into separate talks with Maersk and CMA CGM for an M&A exercise. China Ocean Shipping Co (Cosco) and China Shipping Group Co. are also reportedly in advanced talks to combine the groups’ container-shipping units.

· Westports management believes that there could be a further shake-up of alliances in the shipping industry in 2017/18. However, visibility is unclear. We believe it is in a prime position to maintain or advance its market share in view of advantages in location, costs and efficiencies.

· 2. For 9MFY15, total container volume was up 9% YoY (transshipment 11%; gateway 3%) at 6.7mil TEUs. This was despite a flat throughput growth in the region during the same period. The bulk of the increase stemmed from the Ocean 3 alliance, which is using the port as their hub.

· 3. It is entering into talks with shippers on the 15% hike in transshipment tariffs, while the tariff hike for gateway traffic has been implemented, with effect from 1 Nov 2015.

· 4. It does not expect any impact from the Trans-Pacific Partnership Agreement for the next two years, but the rule of thumb dictates that more free trade equates to more trade.

· 5. Historically, Westports’ performance is the highest in 4Q. It has seen exports starting to rise (in view of the weak ringgit) but not for imports yet. It is maintaining its container volume growth projection at 5%-10%.

· 6. Westports has appealed for the reinstatement of the investment tax allowance that expired at the end of last year. It is hopeful for it to occur for FY16 when a large portion of the RM1bil capex for CT8 will be spent.

· Westports posted a 3QFY15 net profit of RM130mil (+6.5% QoQ, -7.7% YoY), bringing the 9MFY15 core earnings to RM372.3mil (-0.0% YoY) – meeting expectations. · The 9MFY15 earnings account for 73% of our full-year forecasts, and ~71% of consensus estimate. Maintain BUY.

Source: AmeSecurities Research - 16 Nov 2015