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Westports Holdings Berhad
Under-pricing the Tariff Risk
TP: RM5.57 (-0.3%)
Last Traded: RM5.59
SELL
(ESG: ★★★★☆)
(ESG: ★★★★☆)
Tan Kam Meng, CFA
Tel: +603-2167 9605
kmtan@ta.com.my
www.taonline.com.my
Review
- Westports Holdings’ (Westports) 1H25 core profit of RM454.7mn was in line with expectations at 48% of market forecast. For this quarter, the group declared a first interim dividend of 9.93sen/share, which comprised a cash portion of 7.94sen and a dividend reinvestment (DRIP) portion of 1.99sen.
- 1H25 core profit jumped 11.3% YoY to RM454.7mn mainly driven by port revenue growth. 1H25 port revenue soared 9.6% to RM1.2bn underpinned by 6% growth in transhipment that more than offset 0.4% decline in gateway volume (Figure 1). In addition, the increase in value added services (VAS) also contributed to higher revenue too (Figure 2). The net margin was stable at 37.9%, up 0.6%-pts for 1H25.
- On QoQ basis, 2Q25 core profit grew 4.4% to RM232.2mn, supported by a significant 11.3% increase in transhipment to 1.68mn TEUs. Meanwhile, the gateway volume increased by 1.7% QoQ to 1.2mn TEUs, reflecting Malaysia’s resilient trade performance in 2Q25. Overall, the QoQ improvement was in line with the seasonal pattern where the total throughput tends to be stronger in 2Q versus 1Q.
Forecast Revision
| FY25 | FY26 | |
|---|---|---|
| Forecast Revision (%) | 0.0 | 0.0 |
| Net profit (RMm) | 944.0 | 990.7 |
| Consensus | 938.9 | 1,080.0 |
| TA’s / Consensus (%) | 100.5 | 91.7 |
| Previous Rating | Sell (Maintained) | |
| 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 |
Scorecard
| % of FY | ||
|---|---|---|
| vs TA | 48.2 | Within |
| vs Consensus | 48.4 | Within |
Share Performance (%)
| Price Change | WPRTS | FBM KLCI |
|---|---|---|
| 1 mth | 3.5 | (0.5) |
| 3 mth | 31.5 | (0.4) |
| 6 mth | 25.1 | (1.5) |
| 12 mth | 30.2 | (5.6) |
(12-Mth) Share Price relative to the FBMKLCI chart data is not available.
Impact
- No change to our FY25-27 earnings projections.
Outlook
- Management did not observe any acceleration in front-loading that would benefit Malaysia in 2Q25 as far as trade is concerned. It believes that the front-loading activities would be more prevalent in China during the 90-day tariff pause.
- VAS revenue increased by 11% due to higher storage income. Yard utilisation rate was strong at 87% in 2Q25. We believe this was a sign of blank sailing and empty shipping containers as shipping liners were redirected to Chinese cargoes during the tariff truce.
- It is still early to evaluate the tariff impact before the tariffs on China’s exports are finalised. Likewise, the interest of Chinese manufacturers to expedite the China + 1 strategy, after knowing the transhipment will be slapped with a 40% tariff, remains unclear. According to management, Westports is unable to identify the port of origin for transhipments that arrive at Port Klang.
- With regards to the DRIP, 3 options are available, i.e., i) cash (default), 2) reinvest entire portion, and 3) reinvest part of the electable portion. Datuk Ruben reaffirmed that his family would subscribe for all the share entitlements under DRIP.
Valuation
DDM Valuation
| 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 |
We maintain Westports’ DDM valuation at RM5.57/share and reiterate SELL recommendation on the stock.
Financials & Analysis
Table 1: Earnings Summary (RMmn)
| FYE Dec 31 | 2023 | 2024 | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Revenue | 2088.6 | 2344.1 | 2368.8 | 2460.1 | 2542.1 |
| EBITDA | 1296.3 | 1409.4 | 1458.7 | 1518.5 | 1570.9 |
| EBITDA Margin (%) | 62.1 | 60.1 | 61.6 | 61.7 | 61.8 |
| Adj. PBT | 1004.4 | 1133.3 | 1220.7 | 1297.6 | 1322.3 |
| Core Net Profit | 777.6 | 892.6 | 944.0 | 990.7 | 1009.8 |
| EPS (sen) | 22.8 | 26.2 | 27.7 | 29.1 | 29.6 |
| EPS growth (%) | 9.0 | 14.8 | 5.8 | 4.9 | 1.9 |
| PER (x) | 24.8 | 21.6 | 20.4 | 19.4 | 19.1 |
| GDPS (sen) | 16.9 | 19.8 | 20.4 | 21.4 | 21.8 |
| Div yield (%) | 3.0 | 3.5 | 3.6 | 3.8 | 3.9 |
| EV/EBITDA (x) | 14.9 | 13.7 | 13.1 | 12.4 | 12.1 |
| ROE (%) | 22.5 | 25.7 | 22.1 | 19.7 | 18.3 |
Table 2: 2Q25 Results Analysis (RMmn)
| YE 31 Dec | 2Q24 | 1Q25 | 2Q25 | QoQ (%) | YoY (%) | 6M24 | 6M25 | YoY (%) |
|---|---|---|---|---|---|---|---|---|
| Port Revenue | 553.0 | 591.8 | 607.1 | 2.6 | 9.8 | 1094.0 | 1198.9 | 9.6 |
| —> Container | 482.0 | 493.0 | 511.0 | 3.7 | 6.0 | 952.0 | 1004.0 | 5.5 |
| –> Transhipment (mn TEUs) | 1.5 | 1.5 | 1.7 | 11.3 | 9.8 | 3.0 | 3.2 | 6.0 |
| –> Gateways (mn TEUs) | 1.2 | 1.2 | 1.2 | 1.7 | 0.8 | 2.4 | 2.4 | (0.4) |
| —> Conventional | 37.0 | 37.0 | 36.0 | (2.7) | (2.7) | 72.0 | 73.0 | 1.4 |
| –> Other | 35.0 | 61.0 | 61.0 | 0.0 | 74.3 | 71.0 | 122.0 | 71.8 |
| EBITDA | 342.3 | 383.4 | 392.1 | 2.3 | 14.5 | 678.0 | 775.5 | 14.4 |
| Depr. & Amrt. | (67.5) | (68.6) | (69.9) | 1.8 | 3.5 | (132.9) | (138.5) | 4.2 |
| EBIT | 274.7 | 314.8 | 321.6 | 2.2 | 17.1 | 545.0 | 636.4 | 16.8 |
| Net finance cost | (9.4) | (23.1) | (23.1) | (0.1) | >100 | (17.9) | (46.2) | >100 |
| Adj PBT | 266.0 | 292.5 | 301.1 | 3.0 | 13.2 | 531.4 | 593.6 | 11.7 |
| Net profit | 203.7 | 222.5 | 231.6 | 4.1 | 13.7 | 408.3 | 454.1 | 11.2 |
| Adjusted net profit | 203.8 | 222.5 | 232.2 | 4.4 | 13.9 | 408.4 | 454.7 | 11.3 |
| Adj EPS (sen) | 6.0 | 6.5 | 6.8 | 4.4 | 13.8 | 12.0 | 13.3 | 11.2 |
| Dividend (sen) | 8.9 | 0.0 | 9.9 | nm | 11.7 | 8.9 | 9.9 | 11.7 |
Figures & Charts
Figure 1: Container throughputs expanded by 3% YoY for 1H25, supported by transhipments (+6%)
This figure shows quarterly container throughput in million TEUs, broken down into Transhipment and Gateway volumes from 1Q19 to 2Q25. It illustrates a general upward trend with seasonal fluctuations, highlighting the recent growth in transhipment volumes.
Figure 2: 1H25 container revenue grew 5.5% due to surge in transhipment and value-added services
This chart displays semi-annual revenue in RM’mn, segmented into Container, Conventional, Marine, and Rental categories for FY22, FY23, 1H24, and 1H25. The data shows a significant increase in container-related revenue in 1H25.
Figure 3: Depreciation & fuel continued to trend lower, offsetting higher labour cost
This chart illustrates quarterly costs in RM’mn, broken down into Depreciation, Manpower, Fuel, and Other categories from 1Q19 to 2Q25. The data indicates a consistent trend of decreasing depreciation and fuel costs over time.
Figure 4: Intra-Asia declined due to trade disruptions
This chart shows percentage growth/decline for different trade routes (Asia-Europe and Intra-Asia) across various recent quarters (2Q24 to 2Q25). It highlights a decline in Intra-Asia trade, while Asia-Europe trade shows strong growth.
