Period  4Q13/FY13

Actual vs. Expectations Above expectations. WPRTS recorded a 4Q13 core net profit of RM126.6m (QoQ, 25.9% 15.0%YoY), bringing its FY13 NP to RM414.5m (14.8% YoY) which made up 109.4% and 95.0% of our and the consensus full-year estimates, respectively. The main reasons behind the better-than-expected performance are: (i) higher-than-expected container tariff per TEU and (ii) better-than-expected volume growth in the conventional division.

Dividends  As expected, a second interim single-tier dividend of 5.2 sen was declared, bringing YTD net dividends to 9.6 sen, representing 3.8% net yield.

Key Result Highlights YoY, the FY13 operational revenue saw a decent growth of 10%, underpinned by improvement in container throughput (+8%YoY). Net profit, on the other hand, registered a healthy growth of 20.6% on the back of savings of management fee arising from termination of MSA and also better economies of scale due to higher container throughput. However, on a core basis, excluding IPO related and management fee, the earnings grew by 14.8% YoY.

 QoQ, the 4Q13 operational revenue increased marginally by 2.6% led also by improvement in container throughput (+3.2%YoY). PBT is 1.5% lower QoQ also due to slightly higher operating costs.

Outlook  We are encouraged by the stronger-than-expected results as it shows that the overall trade volume in the region had improved in FY13.

 Currently, the group is in the midst of completing an additional container terminal (CT7) with the first 300m berth (B20) completed. By the end of 2014, CT7 is scheduled to be fully operational and this will increase the group’s handling capacity from 9.5m TEU to 11.0m TEU.

 Management expects their container volume to grow at between 5.0% and 10.0% in 2014 driven by higher growth transhipment volumes from China-Africa, China-Middle East and Intra SEA routes.

Change to Forecasts We have revised our FY14 earnings 7.7% upwards on higher utilisation rate assumptions of container terminals (79-81%).

 We also introduced our FY15E net earnings at RM503.8m, which implies 2-year CAGR of 7.6%, with the main driver being the commencement of CT7, which expands to capacity to 11.0m TEU.

Rating Maintained at OUTPERFORM

Valuation  As a result of our earnings revision, our DDM-derived TP (required return on equity: 7.3%, terminal growth: 1.3%) has increased to RM2.91 from RM2.85 previously, which implies forward PER of 20.9x.

Risks to our Call Lower-than-expected throughput growth

 Higher-than-expected depreciation and fuel cost

Source: Kenanga