KUALA LUMPUR (Dec 11): TA Securities Research has maintained “buy” on Westports Holdings Bhd at RM3.57, and raised its dividend discount model-based target price to RM4.03 (from RM4), based on an unchanged discount rate of 6.2%, after the port operator entered into a third supplemental privatisation agreement with the government and the Port Klang Authority.

In a note on Monday, the research house said that overall, it is positive on this long-awaited concession agreement and the start of this multi-billion infrastructure project at Port Klang, which are important for Westports and Malaysia to remain competitive in the region in terms of future economic growth and inflow of foreign direct investments.

Westports announced last Friday that it had secured a 58-year extension until 2082 to its original concession agreement with the government, and that its wholly owned Westports Malaysia Sdn Bhd (WMSB) had inked a third supplemental privatisation agreement with the government and Port Klang Authority (PKA) for the extension.

Previously, the Westports privatisation agreement between the government, PKA and WMSB was signed for a period of 30 years ending on Aug 31, 2024.

The new concession will include existing port facilities in Westports, as well as new facilities to be developed during the period involving an investment of RM39.6 billion. The extension will facilitate the expansion of container terminals 10 to 17, according to Westports.

The concession provides some flexibility for Westports to expand its capacity further if needed, said TA Securities.

“As far as risk is concerned, we opine that concessionaires in Malaysia could usually enter into new supplemental agreements for long-duration concessions if there are any unforeseen factors affecting the functionality of mega infrastructure in the country,” it said.

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