Period  3Q14/9M14

Actual vs. Expectations  WPRTS recorded 3Q14 core profit of RM140.9m, bringing its 9M14 core profit to RM372.4m. This is within expectations, which accounted for 78.5% and 74.8% of ours, and streets’, FY14 full-year forecast, respectively.

Dividends  No dividend was declared for the quarter.

Key Result Highlights Core profit in 3Q14 rose 8.0% YoY underpinned by: (i) 11.3% YoY growth in container throughput handled and (ii) lower effective tax rate of 9.9% vs. 20.8% in 3Q13 due to higher investment tax allowance.

 Sequentially, 3Q14 core earnings gained 15.0%, which was driven by 3.3% growth in throughput and lower effective tax rate of 9.9% vs. 17.6% in 2Q14 which we believe is due to uneven tax investment allowance across different quarters.

 In 9M14, core profit grew 10.0% YoY attributable to 12.0% YoY gain in container throughput handled and also lower effective tax rate of 14.7% vs. 21.1% in 9M13, due to the same reasons mentioned above.

Outlook  In view of robust growth of container throughput achieved in the first 9 months of 2014, WPRTS has decided to embark on the expansion of Container Terminal 8 (CT8) which will bring its container handling capacity from 11.0m TEUs to 13.8m TEU.

 Commencement of the construction of the Phase 1 of CT8 is expected to be in early 2015, expected to be completed in 2016. Phase 2 of the expansion project, on the other hand, is scheduled to be completed in 2017.

 We are positive on the expansion plan of CT8 as it will position the group to ride on the encouraging growth of container throughput handled in Westport.

 The newly-formed OCEAN 3 alliance consisting of the group’s major clients is expected to benefit WPRTS in the medium-term as their clients may capture further market share from peers from efficiencies gain through route sharing agreements.

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

Rating Maintained at MARKET PERFORM

Valuation  TP is maintained at RM3.13/DDM share. (Ke:7.3%, g: 1.25%)

Risks to our Call Lower-than-expected throughput growth

 Emergence of major shipping alliances

Source: Kenanga