Westports’ 9M15 earnings came in below our expectations, largely dueto the lower than expected throughput growth and margin expansion. Nonetheless, we believe it is still a sound set of results with PBT growth of 10.8% YoY. We have revised our earnings forecast for FY15-FY17down by 6-9% to reflect lower throughput growth as well as higher costassumptions. Maintain BUY with a revised TP of MYR4.77 (10.3% upside), post our updated valuation parameters.

A miss. Westports’ 9M15 core earnings of MYR373m (-0.2% YoY) were below our but was within consensus expectations at 66% and 70%. Itsoperating revenue was in line with our expectation albeit at lower than expected TEU volume growth rate due to the slowdown of intra-Asia trade. However, this was partly mitigated by Asia-Europe and AsiaAmerica trades that recorded strong double-digit growth which we attribute to the macroeconomic recovery in those regions. On the other hand, core earnings looked flattish, distorted by the absence of investment tax allowance during the period. We opine that PBT is a more meaningful comparable of which had expanded 10.8% YoY in the 9M15period underpinned by margin improvements (2-3ppts) across the boardwhich were boosted by, amongst others, lower fuel costs (-27% YTD).

Forecasts. Pursuant to its 9M15 performance, we have revised down our FY15/FY16/FY17 throughput growth to 9%/8%/6% in view of signs of a slowdown of growth from its intra-Asia trade. We also made adjustments to its operational cost assumptions and subsequently revised down our earnings forecast by 5%/9%/8% respectively.

Briefing highlights. The positive key takeaways were: i) smooth implementation of tariff hike in November and ii) the Company is still working towards obtaining another round of investment tax allowance next year in view of its heavy investment on CT8, and iii) export volume is seen to pick up in 4Q15 in light of weaker MYR. We are also pleased tat growth in Asia-America and Asia-Europe trade lane remains encouragingly strong (growing by 109% and 20% YTD).

Maintain BUY. Notwithstanding our earnings revision, we increase our DCF-derived TP slightlyto MYR4updating our valuation parameters (beta is adjusted downward to 0.60 vs 0.75 previously to reflect the defensive quality of the stock).