KEY INVESTMENT HIGHLIGHTS

• FY24 results aligned with expectations
• Gateway cargoes held strong ahead of festive season
• Container volume expected to grow +3.0%yoy in FY25
• Earnings estimates adjusted upward by +2% to +3%
• Maintain NEUTRAL with a revised TP of RM4.43

Within expectations. Westports Holdings Berhad (Westports) recorded a 4QFY24 core PAT of RM256.4m, bringing the total to RM900.4m for FY24. This aligns with our expectations at 102% of our estimate, slightly exceeding the consensus at 106%. In line with its 75% dividend payout policy, a second interim dividend of 10.86sen was declared, bringing the FY24 total to 19.75sen.

Quarterly. Container volume in 4QFY24 rose slightly to 2.87m TEUs (+0.2%yoy), driven by record gateway cargoes (+3.3%yoy) ahead of Lunar New Year, offsetting transshipment weakness (-1.8%yoy).

However, container revenue rose +11.1%yoy, supported by; (i) increased handling of higher-yielding gateway cargoes, and (ii) higher value-added services (VAS) revenue, mainly from extended storage of metal commodities due to regulatory delays. Conventional revenue rose +5.1%yoy, despite an -8.1%yoy volume decline, boosted by higher breakbulk revenue from steel, ingots, and project cargoes. Core PAT grew +24.7%yoy, aided by higher investment tax allowance (ITA) claimed for terminal truck purchases. Sequentially, core PAT rose +11.1%qoq on seasonality, with container volumes up +6.3%qoq (transshipment: +11.0%qoq, gateway: +1.6%qoq).

Outlook. Overall container volume for FY24 remained largely flat, growing by just +0.9%yoy as expected. Management has guided for low single-digit growth in container volume for FY25, which we estimate to be a +3.0%yoy increase. We expect the growth trend to remain driven by gateway operations, though the strong momentum from recent FDIs is likely to ease. This is evident in the moderation of gateway growth, which stood at +8.4%yoy in FY24, compared to +14.1%yoy in FY23. Additionally, the Port Klang Authority (PKA) is anticipated to announce its decision on the proposed tariff hike within this quarter.

Maintain NEUTRAL. We have made slight upward adjustments to our FY25/FY26 core PAT estimates by +2%/+3%, respectively, following the update of full-year figures. Consequently, our DCF-derived target price is now slightly higher at RM4.43 (from RM4.30). We maintain our NEUTRAL call, with the stock trading at an FY25F PER of 16.2x, in line with its 5-year historical average. Key potential upsides include the possibility of a larger tariff hike or an upward revision in container volume growth guidance.

Source: MIDF Research - 24 Jan 2025