KUALA LUMPUR (Jan 23): AmBank Research has maintained its “buy” rating on Westports Holdings Bhd at RM3.71 with a higher fair value of RM4.27 (from RM4.03) from a rolled-forward FY2024F price earnings ratio of 18 times, in line with its three-year average and a 3% premium of an unchanged four-star ESG rating.

In a note on Tuesday, the research house said the three-month share price rally of 11% reflected investor optimism on Westports as a key beneficiary of regional nearshoring and friendshoring activities due to the China+1 strategy.

“We understand that Westports achieved an all-time record high by handling more than one million TEUs in December 2023, surpassing the monthly average of 0.8mil TEUs in FY2022.

“We assume a largely neutral impact from the Red Sea disruption on Westports’ container throughput volume given that 1) container traffic is still moving, unlike the Suez Canal blockade in 2021, and 2) country’s low trade dependency (8% in 2023) with Europe,” it said.

AmBank said that currently, no visible impact can be seen at the port, as guided by management.

“Even so, we think there may be some shipping delays as liners re-route around Cape of Good Hope, adding 14 days of transit period to 39-41 days from only 25-27 days through the Red Sea.

“Against the backdrop of shipping schedule disruptions, we expect a slightly lower port throughput in 1QFY24, followed by a recovery in 2QFY24 on a resumption of Red Sea transit.

“Hence, we made no changes to FY2023F-FY2024F annual volume guidance of 6% as the quarterly fluctuation could normalise this year,” it said.

At the time of writing, Westports was up 1.08% or four sen to RM3.75, with 15,400 shares traded.