A MEMBER OF THE TA GROUP
Wednesday, July 30, 2025
FBMKLCI: 1,523.82
Sector: Transportation
Westports Holdings Berhad
Trade Dangers Ahead
Results preview
Westports will release its 2Q25 results performance this Friday. We expect the 1H25 profit to range between RM420mn and RM475mn, accounting for 45-50% of our full-year forecast.
In general, we expect 2Q25 key operating metrics to track the trade performance of Malaysia and China during the period. As such, we project Westports’ 2Q25 gateway and transhipment volume to be around 1.2-1.25mn and 1.53-1.58mn TEUs, respectively, by referring to Malaysia and China’s respective trade growth of 6.1% and 4.5% YoY in 2Q25.
48-hours to impact
2 days away from President Trump announcing final trade tariffs for every nation, we remain hopeful that the Malaysian government will secure a more favourable deal within the next 48 hours, though the odds appear slim. Should negotiations fall through, we believe the looming 25% export tariff would significantly undermine Malaysia’s trade competitiveness, putting the country at a distinct disadvantage. More critically, we expect tariff-inflated U.S. imports to dampen consumer spending in the 4Q25, particularly given that many consumers likely stocked up during the 90-day tariff reprieve.
Recently, President Trump has indicated that all countries will face tariffs ranging from 15% to 50%. As such, Malaysia would be able to minimise the impact from the structural change only if the tariff is set at 20% levels or near to its peers, i.e., Vietnam (20%), the Philippines (19%), Indonesia (19%), Japan (15%) and EU (15%). As the access to US’ high-tech chips and China’s rare earth minerals and magnets would remain the key concerns of both countries and subject to export restrictions, we believe the rule of origin would also be applied to Malaysian exports as Malaysia is one of the important transhipment hubs in the strait of Malacca. In other words, higher tariff could be imposed on goods transhipped through Malaysia like the trade deal between US-Vietnam, which include a 40% tariff on transhipment.
Impact
We keep our FY25-27 earnings unchanged at this juncture and maintain Westports’ FY25 transhipment and gateway volume growth assumptions of 3% and 2% respectively, pending the tariff outcome in Aug-25.
Valuation
We maintain Westports’ DDM valuation at RM5.57/share, based on discount rate of 4.8%. However, as the share price has appreciated by 22% since the port tariff hike announcement (refer to report dated 17 June 2025), we believe the market has fully priced in the positive impact from port tariff adjustment. We downgrade Westports to Sell ahead of the looming risk from the trade tariff.
| Share Information | |
|---|---|
| Bloomberg Code | WPRTS MK |
| Stock Code | WPRTS |
| Listing | Main Market |
| Share Cap (mn) | 3410.0 |
| Market Cap (RMmn) | 19266.5 |
| 52-wk Hi/Lo (RM) | 4.89/3.94 |
| 12-mth Avg Daily Vol (‘000 shrs) | 1702.0 |
| Estimated Free Float (%) | 19.9 |
| Beta | 0.5 |
| Major Shareholders (%) | |
| Pembinaan Redzai | 42.4% |
| South Port Inv | 23.6% |
| EPF | 7.7% |
| KWAP | 6.4% |
| Forecast Revision | FY25 | FY26 |
|---|---|---|
| Forecast Revision (%) | 0.0 | 0.0 |
| Net profit (RMm) | 944.0 | 990.7 |
| Consensus | 935.6 | 1,080.0 |
| TA’s / Consensus (%) | 100.9 | 91.7 |
| Previous Rating | Buy (Downgraded) | |
| Consensus Target Price (RM) | 5.62 | |
| Financial Indicators | FY25 | FY26 |
|---|---|---|
| Net Gearing (%) | Net cash | Net cash |
| CFPs (sen) | 16.1 | 15.8 |
| P/CFPS (x) | 35.0 | 35.7 |
| ROE (%) | 22.1 | 19.7 |
| NTA/Share (RM) | (0.2) | (0.1) |
| Price/NTA (x) | nm | nm |
| Share Performance (%) | WPRTS | FBM KLCI |
|---|---|---|
| 1 mth | 7.2 | (0.3) |
| 3 mth | 35.5 | 0.1 |
| 6 mth | 25.9 | (1.9) |
| 12 mth | 31.1 | (6.2) |
(12-Mth) Share Price relative to the FBMKLCI
[Chart data visualization placeholder]
Source: Bloomberg
Financial Summary & Projections
| DDM | |
|---|---|
| Rf | 3.0% |
| Market return | 6.6% |
| Beta (x) | 0.5 |
| CAPM | 4.8% |
| NPV (RM’mn) | 18,450 |
| Outstanding shares (mn) | 3,410 |
| Fair value exc. ESG (RM/share) | 5.41 |
| ESG premium | 3% |
| Fair value (RM/share) | 5.57 |
| Key Assumptions | 2023 | 2024 | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Gateway (mn TEUs) | 4.5 | 4.9 | 5.0 | 5.1 | 5.2 |
| Transhipment (mn TEUs) | 6.4 | 6.1 | 6.3 | 6.4 | 6.5 |
| FYE Dec 31 (RM’mn) | 2023 | 2024 | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Revenue* | 2088.6 | 2344.1 | 2368.8 | 2460.1 | 2542.1 |
| COGS | (916.2) | (900.6) | (875.0) | (905.3) | (933.9) |
| Gross profit | 1235.8 | 1443.5 | 1493.9 | 1554.8 | 1608.2 |
| EBITDA | 1296.3 | 1409.4 | 1458.7 | 1518.5 | 1570.9 |
| Depreciation | (172.5) | (176.3) | (88.5) | (84.1) | (79.9) |
| Amortisation | (86.4) | (78.4) | (118.3) | (131.9) | (127.7) |
| EBIT | 1037.5 | 1194.5 | 1251.8 | 1302.6 | 1363.4 |
| Net finance cost | (41.7) | (55.8) | (44.2) | (19.0) | (56.0) |
| El | 1.8 | 5.3 | 0.0 | 0.0 | 0.0 |
| PBT | 1006.2 | 1138.7 | 1220.7 | 1297.6 | 1322.3 |
| Adj PBT | 1004.4 | 1133.3 | 1220.7 | 1297.6 | 1322.3 |
| Tax | (226.8) | (240.7) | (276.6) | (306.8) | (312.5) |
| Net profit | 779.4 | 898.0 | 944.0 | 990.7 | 1009.8 |
| Adj net profit | 777.6 | 892.6 | 944.0 | 990.7 | 1009.8 |
| EPS (sen) | 22.8 | 26.2 | 27.7 | 29.1 | 29.6 |
| DPS (sen) | 16.9 | 19.8 | 20.4 | 21.4 | 21.8 |
| * Excluding construction revenue | |||||
| Cash Flow (RM’mn) | 2023 | 2024 | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| PBT | 1006.2 | 1138.7 | 1202.8 | 1278.5 | 1302.1 |
| Non- cash item | 265.1 | 152.2 | 206.8 | 215.9 | 207.5 |
| Chg in working capital | (102.9) | 18.4 | 38.4 | (2.5) | (2.2) |
| Tax | (174.5) | (167.1) | (276.6) | (306.8) | (312.5) |
| Others | 0.7 | 149.2 | 31.2 | 5.0 | 41.0 |
| CFO | 994.6 | 1291.4 | 1202.6 | 1190.1 | 1235.9 |
| Capex | (226.8) | (609.7) | (660.0) | (660.0) | (660.0) |
| Others | 13.6 | 26.2 | 7.8 | 9.5 | 8.0 |
| CFI | (213.2) | (583.5) | (652.2) | (650.5) | (652.0) |
| Net Borrowing/Rpmt | (126.2) | 481.1 | (135.0) | (427.5) | 647.5 |
| Dividend Paid | (533.7) | (600.5) | (694.6) | (728.8) | (742.2) |
| Others | (96.9) | (394.6) | 448.0 | 471.5 | (64.1) |
| CFF | (756.7) | (514.0) | (381.6) | (684.7) | (158.8) |
| Balance Sheet (RM’mn) | 2023 | 2024 | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Assets | |||||
| PPE | 1739.0 | 1686.5 | 1598.0 | 1513.9 | 1434.0 |
| Concession assets | 2477.8 | 4732.7 | 5274.4 | 5802.5 | 6334.8 |
| Right of use | 238.2 | 254.9 | 267.9 | 281.9 | 296.9 |
| LT Assets | 4454.9 | 6674.0 | 7140.2 | 7598.3 | 8065.7 |
| Trade & other receivables | 280.7 | 316.5 | 389.4 | 404.4 | 417.9 |
| Cash & Cash equivalent | 577.9 | 780.8 | 949.6 | 804.5 | 1229.7 |
| Other | 25.7 | 6.7 | 6.7 | 6.7 | 6.7 |
| ST Assets | 884.3 | 1104.0 | 1345.7 | 1215.5 | 1654.2 |
| Total Assets | 5339.2 | 7778.0 | 8485.9 | 8813.8 | 9720.0 |
| Liabilities & Equity | |||||
| Trade and other payables | 159.0 | 213.1 | 324.5 | 337.0 | 348.2 |
| ST Borrowings | 125.0 | 175.0 | 365.0 | 227.5 | 165.0 |
| Others | 332.2 | 374.5 | 374.5 | 374.5 | 374.5 |
| ST Liabilities | 616.1 | 762.7 | 1064.0 | 939.0 | 887.8 |
| LT Borrowings | 725.0 | 905.0 | 580.0 | 290.0 | 1000.0 |
| Others | 478.0 | 2292.7 | 2292.7 | 2292.7 | 2292.7 |
| LT Liabilities | 1203.0 | 3197.7 | 2872.7 | 2582.7 | 3292.7 |
| Share Cap | 1038.0 | 1038.0 | 1538.0 | 2038.0 | 2038.0 |
| Reserves | 2482.1 | 2779.6 | 3011.1 | 3254.1 | 3501.5 |
| Shareholders’ Funds | 3520.1 | 3817.6 | 4549.1 | 5292.1 | 5539.5 |
| Liabilities + Equities | 5339.2 | 7778.0 | 8485.9 | 8813.8 | 9720.0 |
| Ratio | 2023 | 2024 | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| EPS Growth (%) | 9.0 | 14.8 | 5.8 | 4.9 | 1.9 |
| PER (x) | 24.9 | 21.7 | 20.6 | 19.6 | 19.2 |
| Div Yield (%) | 3.0 | 3.5 | 3.6 | 3.8 | 3.8 |
| Net cash (RMm) | (272.1) | (299.2) | 4.6 | 287.0 | 64.7 |
| Net gearing (x) | 0.1 | 0.1 | Net cash | Net cash | Net cash |
| ROE (%) | 22.5 | 25.7 | 22.1 | 19.7 | 18.3 |
| ROA (%) | 14.6 | 13.6 | 11.6 | 11.5 | 10.9 |
| NTA (RM) | 0.3 | (0.3) | (0.2) | (0.1) | (0.2) |
| P/NTA (x) | nm | nm | nm | nm | nm |
| EV/EBITDA (x) | 15.2 | 14.0 | 13.3 | 12.6 | 12.3 |
Stock Recommendation Guideline
| BUY | Total return of the stock exceeds 12%. |
| HOLD | Total return of the stock is within the range of 7% to 12%. |
| SELL | Total return of the stock is lower than 7%. |
| Not Rated | The company is not under coverage. The report is for information only. |
Total Return of the stock includes expected share price appreciation, adjustment for ESG rating and gross dividend. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting.
Total Return of the sector is market capitalisation weighted average of total return of the stocks in the sector.
ESG Scoring & Guideline
| Environmental ★★★ | Social ★★★★ | Governance ★★★★ | Average ★★★★ | |
|---|---|---|---|---|
| Remark | The needs of dredging, land reclamation and deforestation for port operations and expansion will cause air pollution and other negative environmental impact. | There are clear policies on human rights and worker safety, and other forms of supports to improve workers’ social wellbeing. | Good IR works will reassure shareholders’ rights are well protected. Anti-bribery and corruption are clearly documented and the board will oversee the compliance of policy. | |
| ★★★★★ (≥80%) | Displayed market leading capabilities in integrating ESG factors in all aspects of operations, management and future directions. | +5% premium to target price | ||
| ★★★★ (60-79%) | Above adequate integration of ESG factors into most aspects of operations, management and future directions. | +3% premium to target price | ||
| ★★★ (40-59%) | Adequate integration of ESG factors into operations, management and future directions. | No changes to target price | ||
| ★★ (20-39%) | Have some integration of ESG factors in operations and management but are insufficient. | -3% discount to target price | ||
| ★ (<20%) | Minimal or no integration of ESG factors in operations and management. | -5% discount to target price | ||
Disclaimer
The information in this report has been obtained from sources believed to be reliable. Its accuracy and/or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein.
As of Wednesday, July 30, 2025, the analyst, Tan Kam Meng, who prepared this report, has interest in the following securities covered in this report: (a) nil