Period  2Q14/1H14

Actual vs. Expectations WPRTS recorded 2Q14 core net profit of RM122.5m which is within expectations, accounting for 48.9% and 47.3% of our full-year forecast and street consensus, respectively.

Dividends  It has announced a first interim single tier dividend of 5.1 sen/share, which is within our expectation, accounting for 48.9% of our full-year forecast of 10.4sen/share.

Key Result Highlights On a normalised basis, core net profit in 2Q14 registered a decent growth of 11.7% YoY after excluding quit rent provision reversal, IPO-related expenses and management fee underpinned by 14.2% growth achieved for its container throughput in the quarter primarily driven by Intra-Asia trade lane container traffic (+16.8% YoY in 2Q14).

 Positive growth of 12.3% is also seen in 2Q14 core net profit on a QoQ basis on the back of 8.0% improvement in container throughput.

 In 1H14, core net profit surged 16.2% YoY due to a 13.0% YoY improvement in container throughput handled. Intra-Asia and Asia-Europe trade lanes throughput, which accounted for 71.8% of the group’s total container throughput, registered robust growth of 12.9% and 5.4% respectively.

Outlook  We are encouraged by the robust container throughput growth achieved in 1H14 albeit being partially offset by a mild drop in break bulk cargo volume and we believe that the momentum could continue in 2H14 albeit at a slower pace given its higher base in 2H13.

 Currently, the group is in the midst of completing an additional container terminal (CT7). The first 300m berth (B20) has been 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 is expecting container throughput to grow at the range of 6.0-13.0% for FY14 on the back of buoyant prospects for world trade, especially within Intra-Asia trade lanes.

Change to Forecasts We maintain our earnings and dividend forecast for now as the results are in-line.

Rating Maintain OUTPERFORM

Valuation  TP is maintained at RM3.13 on DDM valuation methodology. (Ke: 7.3%, g: 1.25%)

Risks to our Call  Lower-than-expected throughput growth.

 Emergence of major shipping alliances.

Source: Kenanga