1H15 earnings were a slight miss owing to lower-than-expected growth from 2Q15 throughput (+3%), although this was mitigated by lowerthan-expected costs from outsourcing and fuel. Maintain BUY, with a revised DCF-derived MYR4.73 TP (from MYR4.85, 18% upside), given that we have reduced FY15F-17F earnings by 3% as we lower our FY15 throughput growth to 10.6% from 12.2%.
Slight miss. 1H15 earnings of MYR242m (+4.1% YTD) were a slight miss, noting that Westports’ PBT (+14.7% YoY) only came in at 46% of full-year estimates (1H14: 48%). Note that PBT is a more meaningful YoY comparison given the investment tax credit allowance distorting bottomline comparisons. The miss was attributed to the slower-thanexpected throughput growth of only 3.3% YoY achieved in 2Q15 due to the sharp drop in Asia-Africa trade and the slowing growth from intraAsia trade. Despite the slight shortfall in Westports’ topline, this was mitigated by the higher-than-expected margins expansion seen on lower costs from outsourcing (as a less peak period occurred) and reduced fuel costs. A 5.32 sen DPS was announced.
Forecasts. Our previous 12.2% YoY FY15 throughput growth is not likely to be met, noting that in 1H15 alone, Westports’ throughput only grew 3.3% YoY (1H15: +10% YoY). With throughput growth likely to be in high single-digit territory for the 2H15, a 10.6% growth for FY15 would be more realistic instead. Our FY16F and FY17F throughput growth remain unchanged at 9.3% and 5.3% respectively. As such, our FY15F/FY16F/FY17F earnings are trimmed by 3%.
Briefing highlights. The positive key takeaways were: i) better-thanexpected margins expansion seen on lower outsourcing needs due to capacity expansion that consequently reduces congestion during peak periods, and ii) a possible tariff hike likely to be announced sometime in 3Q at the earliest. Quantum and timing remain unknown at this juncture. Westports continues to stick to its throughout guidance of 5-10% for FY15 and noted that the upcoming throughput is likely to pick up. We are also pleased that it has started serving the Asia-America trade lane more aggressively now (growing by 89% YTD). This region now represents 5% of total throughput.
Maintain BUY. Post earnings revision, we reduce our DCF-derived TP to MYR4.73 (vs MYR4.85, WACC: 6.6%). Note that our FY16F earnings has reflected a tariff hike assumption of 30% on gateway cargo.
Source: RHB Research - 3 Aug 2015
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WPRTSCreated by kiasutrader | Jun 14, 2016
Created by kiasutrader | May 05, 2016