• Overview. Westports’ 1QFY21 operational revenue and core net profit (exclude one-off gain from insurance recovery for QC51-52) increased to RM496m (+4.6 qoq, +8.5% yoy) and RM188m (+20% qoq, +23% yoy) respectively. These were due to container revenue growth with higher value added services.

• Key highlights. Westport 1QFY21 overall container throughput volume increased by 5% yoy. Its transhipment volume improved by 7% yoy due to Westports’ ability to facilitate additional regional trade volume as its container yard utilisation eased from previous congestion level. As for gateway, volume increased by 3% yoy mainly due to higher import and export laden. The highest growth trade lanes were from Asia-America (+32% yoy) and Asia-Australasia (+29% yoy) as the needs for consumption and hygienic goods increased. (table 2).

• Against estimates: Inline. 1QFY21 core net profit of RM188m (+23% yoy) was in-line with our and consensus forecast at 26% and 27% respectively.

Outlook. We are maintaining our FY21 volume assumption of 4% yoy to a record high of 10.91m TEU in view of economic recovery especially in 2H21 and continued revival in consumer spending from pent-up demand. The country’s strong investment in manufacturing sectors and well as the investment shift in global supply chain out of China especially to South East Asian countries due to the trade and political tensions are expected to benefit Westport in the long run.

• Our call. We maintain our BUY call on the stock with TP of RM4.80, based on DDM (Ke: 8.3%, TG: 5%) and implies a FY21F PER of 22.8x. We continue to like Westports due to i) sustainable business model that combines an attractive high yielding local cargo and volume-centric transhipment, ii) proxy to rising consumption and industrialization in greater Klang Valley, and iii) stable dividend payout of 75%.

Source: BIMB Securities Research - 30 Apr 2021