Hong Leong Investment Bank
HLIB Research | PP 9484/12/2012 (031413)
Briefing & Results Review: 2QFY25
Westports Holdings
Within expectations
Westports reported another strong performance for 2QFY25 with core PATMI of RM232.2m, lifting 1HFY25 to RM454.7m, which was within HLIB/consensus expectations at 49.5%/48.4% of full-year forecast. The growth was mainly driven by higher container VAS revenue and rental rate. At current juncture, management is retaining its guidance of mid-single digit growth for container throughput in 2025, post achieving +3.1% in 1HFY25. Maintain BUY rating with an unchanged DCFE-derived TP of RM6.08. We anticipate continued earnings expansion, on the back of sustained continued volume growth and container tariff hike in 2HFY25.
Within expectations.
Westports reported 2QFY25 core PATMI of RM232.2m (+4.4% QoQ, +13.9% YoY), which brought 1HFY25 sum to RM454.7m (+11.3% YoY). The results were within our and consensus expectations, forming 49.5% and 48.4% of full-year forecasts respectively. 1HFY25 core PATAMI was arrived at after excluding Els amounting to -RM0.6m, mainly on impairments on trade receivables.
Dividend.
Declared an interim dividend of 9.93 sen (details to be announced on later date), which consist of cash payment 7.94 sen and electable portion/DRP 1.99 sen (a discount of not more than 10% to the 5-day weighted average market price).
QoQ.
Core PATMI improved +4.4% to RM232.2m, mainly driven by higher container volume (+7.1%), partially offset by higher administrative and other direct expenses, while operating expenses stayed relatively flattish.
YoY/YTD.
Core PATMI improved +13.9% YoY and +11.3% YTD (to RM454.7m), mainly driven by higher container VAS revenue with higher rental income (on higher sublease renewal rate and the effect of MRFS 16 adjustments), alongside lower fuel cost (decline in MOPS price and RM appreciation against USD) and depreciation charges (extended concession period). These were partially offset by higher manpower expenses, net finance costs and tax expenses.
Outlook.
Despite on-going uncertainties on global trade and economies, Westports maintains its guidance of mid-single digit growth for container throughput in 2025, after achieving +3.1% growth in 1HFY25 (driven by transhipment volume +6.0%, partially offset by lower gateway -0.4%). Average port utilization remains high at 80% in 1HFY25. Management has not seen any meaningful change in on-going volume and future volume as major liners have not change their port calling. The approved tariff hike effective 15th Jul 2025, 1st Jan 2026 and 1st Jul 2027 will improve the group’s cash flow and partly fund WP2 expansion plan. Furthermore, the approved 5-year Dividend Reinvestment Plan (DRP) will be used to partly finance WP2 as well. Management is committed to continue its 75% dividend payout policy. WP2 is progressing well with dredging and land reclamation (achieved 20% completion rate), with construction to start in 1QFY27 and commence operation by 2QFY28 for 1st wharf and 4QFY28 for 2nd wharf.
ESG.
We have include a new ESG Snapshot for Westports. Overall we are positive with the group’s ESG policy and achieve. The group aims to achieve net zero emission by 2050.
Forecast.
Unchanged.
Maintain BUY, TP: RM6.08.
Maintain BUY with an unchanged DCF-derived TP of RM6.08. We expect earnings sustainability, underpinned by tariff hikes and resilient volume movements, despite concerns over global trade slowdown. Also, the DRP is poised to enhance shareholder value, while supporting medium-term capex requirements.
Daniel Wong
kkwong@hlib.hongleong.com.my
(603) 2083 1720
Sector coverage: Logistics
Company description: Westports primarily manages port operations dealing with container and conventional cargo at Port Klang.
Share price
[Share price chart data from Aug-24 to Jul-25 showing WPRTS (LHS) and KLCI (RHS)]
| Historical return (%) | 1M | 3M | 12M |
|---|---|---|---|
| Absolute | 2.9 | 29.7 | 28.2 |
| Relative | 4.1 | 30.5 | 34.7 |
Stock information
| Bloomberg ticker | WPRTS MK |
| Bursa code | 5246 |
| Issued shares (m) | 3,410 |
| Market capitalisation (RM m) | 19,062 |
| 3-mth average volume (‘000) | 4,445 |
| SC Shariah compliant | Yes |
| F4GBM Index member | Yes |
| ESG rating | ★★★★ |
Major shareholders
| Pembinaan Redzai | 42.4% |
| South Port Invest | 23.6% |
| EPF | 7.3% |
Earnings summary
| FYE (Dec) | FY24 | FY25f | FY26f |
|---|---|---|---|
| PATMI – core (RM m) | 892 | 918 | 1,074 |
| EPS – core (sen) | 26.1 | 26.9 | 31.5 |
| P/E (x) | 21.4 | 20.8 | 17.7 |
Financial Forecast
All items in (RM m) unless otherwise stated
Balance Sheet
| FYE Dec | FY23 | FY24 | FY25f | FY26f | FY27f |
|---|---|---|---|---|---|
| Cash | 578 | 781 | 789 | 892 | 995 |
| Receivables | 281 | 316 | 325 | 358 | 378 |
| Inventories | 5 | 7 | 7 | 7 | 7 |
| PPE | 1,739 | 1,687 | 1,648 | 1,613 | 1,580 |
| Concession | 2,478 | 4,733 | 5,054 | 5,376 | 5,699 |
| Others | 259 | 255 | 278 | 300 | 321 |
| Assets | 5,339 | 7,778 | 8,101 | 8,546 | 8,980 |
| Payables | 281 | 316 | 325 | 358 | 378 |
| Debt | 850 | 1,080 | 1,205 | 1,305 | 1,405 |
| Concession liabilities | 61 | 1,812 | 1,799 | 1,786 | 1,772 |
| Others | 627 | 752 | 717 | 709 | 711 |
| Liabilities | 1,819 | 3,960 | 4,046 | 4,158 | 4,267 |
| Shareholder’s equity | 1,038 | 1,038 | 1,038 | 1,038 | 1,038 |
| Retained Profits | 2,482 | 2,780 | 3,017 | 3,350 | 3,675 |
| Equity | 3,520 | 3,818 | 4,055 | 4,388 | 4,713 |
Income Statement
| FYE Dec | FY23 | FY24 | FY25f | FY26f | FY27f |
|---|---|---|---|---|---|
| Revenue | 2,152 | 2,344 | 2,407 | 2,651 | 2,798 |
| EBITDA | 1,294 | 1,443 | 1,470 | 1,672 | 1,781 |
| EBIT | 1,035 | 1,188 | 1,216 | 1,414 | 1,521 |
| Net finance | -42 | -56 | -59 | -59 | -58 |
| Associates & JV | 10 | 0 | 5 | 5 | 5 |
| Exceptionals | 2 | 6 | 0 | 0 | 0 |
| Profit before tax | 1,006 | 1,139 | 1,162 | 1,359 | 1,467 |
| Tax | -227 | -241 | -244 | -285 | -308 |
| PAT | 779 | 898 | 918 | 1,074 | 1,159 |
| Core PAT | 777 | 892 | 918 | 1,074 | 1,159 |
| Consensus core PATMI | 932 | 1,067 | 1,153 | ||
| HLIB/Consensus | 98.4% | 100.7% | 100.5% |
Cash Flow Statement
| FYE Dec | FY23 | FY24 | FY25f | FY26f | FY27f |
|---|---|---|---|---|---|
| EBIT | 1,035 | 1,188 | 1,216 | 1,414 | 1,521 |
| D&A | 259 | 255 | 254 | 258 | 261 |
| Net finance | -42 | -56 | -59 | -59 | -58 |
| Working capital | -107 | 17 | -55 | -26 | -14 |
| Taxation | -227 | -241 | -244 | -285 | -308 |
| Others | 76 | 128 | 0 | 0 | 0 |
| CFO | 995 | 1,291 | 1,112 | 1,301 | 1,401 |
| Capex PPE | -120 | -510 | -400 | -400 | -400 |
| Capex Concession | -107 | -100 | -100 | -100 | -100 |
| Others | 3 | 8 | 0 | 0 | 0 |
| CFI | -224 | -601 | -500 | -500 | -500 |
| Changes in debt | -125 | 230 | 125 | 100 | 100 |
| Shares issued | 0 | 0 | 0 | 0 | 0 |
| Dividends | -534 | -601 | -680 | -741 | -834 |
| Lease payments | -61 | -95 | -13 | -13 | -13 |
| Others | -32 | -44 | -35 | -43 | -51 |
| CFF | -752 | -509 | -603 | -698 | -798 |
| Net cash flow | 18 | 182 | 8 | 103 | 103 |
| Others | 49 | 21 | 0 | 0 | 0 |
| Beginning cash | 511 | 578 | 781 | 789 | 892 |
| Ending cash | 578 | 781 | 789 | 892 | 995 |
Valuation & Ratios
| FYE Dec | FY23 | FY24 | FY25f | FY26f | FY27f |
|---|---|---|---|---|---|
| Rep. EPS (Sen) | 22.9 | 26.3 | 26.9 | 31.5 | 34.0 |
| Core EPS (sen) | 22.8 | 26.1 | 26.9 | 31.5 | 34.0 |
| P/E (x) | 24.5 | 21.4 | 20.8 | 17.7 | 16.4 |
| EV/EBITDA (x) | 14.9 | 13.4 | 13.2 | 11.7 | 10.9 |
| DPS (sen) | 16.9 | 19.8 | 20.2 | 23.6 | 25.5 |
| Dividend yield | 3.0 | 3.5 | 3.6 | 4.2 | 4.6 |
| BVPS (RM) | 1.03 | 1.12 | 1.19 | 1.29 | 1.38 |
| P/B (x) | 5.42 | 4.99 | 4.70 | 4.34 | 4.04 |
| EBITDA margin | 60.1% | 61.5% | 61.1% | 63.0% | 63.7% |
| EBIT margin | 48.1% | 50.7% | 50.5% | 53.3% | 54.3% |
| Net margin | 36.1% | 38.0% | 38.1% | 40.5% | 41.4% |
| ROE | 22.1% | 23.4% | 22.6% | 24.5% | 24.6% |
| ROA | 14.6% | 11.5% | 11.3% | 12.6% | 12.9% |
| Net gearing | 7.7% | 7.8% | 10.3% | 9.4% | 8.7% |
Assumptions
| FYE Dec | FY23 | FY24 | FY25f | FY26f | FY27f |
|---|---|---|---|---|---|
| Container (TEU m) | 10.88 | 10.98 | 11.30 | 11.60 | 11.93 |
| Transhipment | 6.35 | 6.07 | 6.19 | 6.32 | 6.44 |
| Gateway | 4.53 | 4.91 | 5.11 | 5.29 | 5.49 |
| Conventional (mt) | 11.60 | 12.20 | 12.32 | 12.45 | 12.57 |
| Revenue Breakdown (RM m) | |||||
| Container Cargo | 1,805 | 1,950 | 2,064 | 2,273 | 2,400 |
| Conventional Cargo | 139 | 156 | 158 | 172 | 181 |
| Marine | 91 | 86 | 92 | 104 | 109 |
| Rental | 54 | 88 | 93 | 102 | 108 |
| Construction | 63 | 64 | 0 | 0 | 0 |
| Total | 2,152 | 2,344 | 2,407 | 2,651 | 2,798 |
Quarterly results comparison
| FYE Dec (RM m) | 2QFY24 | 1QFY25 | 2QFY25 | QoQ | YoY | 1HFY24 | 1HFY25 | YoY |
|---|---|---|---|---|---|---|---|---|
| Revenue | 554.0 | 591.0 | 608.0 | 2.9% | 9.7% | 1,095.0 | 1,199.0 | 9.5% |
| Container | 482.0 | 493.0 | 511.0 | 3.7% | 6.0% | 952.0 | 1,004.0 | 5.5% |
| Conventional | 37.0 | 37.0 | 36.0 | -2.7% | -2.7% | 72.0 | 73.0 | 1.4% |
| Marine | 21.0 | 23.0 | 22.0 | -4.3% | 4.8% | 43.0 | 45.0 | 4.7% |
| Rental | 14.0 | 38.0 | 39.0 | 2.6% | 178.6% | 28.0 | 77.0 | 175.0% |
| Operational Cost | (165.0) | (163.0) | (164.0) | 0.6% | -0.6% | (331.0) | (327.0) | -1.2% |
| Manpower | (72.0) | (78.0) | (78.0) | 0.0% | 8.3% | (145.0) | (156.0) | 7.6% |
| Fuel | (41.0) | (36.0) | (35.0) | -2.8% | -14.6% | (81.0) | (71.0) | -12.3% |
| Maintenance & Repair | (22.0) | (22.0) | (23.0) | 4.5% | 4.5% | (45.0) | (45.0) | 0.0% |
| Electricity | (15.0) | (13.0) | (14.0) | 7.7% | -6.7% | (29.0) | (27.0) | -6.9% |
| Others | (15.0) | (14.0) | (14.0) | 0.0% | -6.7% | (31.0) | (28.0) | -9.7% |
| Gross Profit | 336.7 | 380.9 | 395.8 | 3.9% | 17.6% | 660.8 | 776.8 | 17.6% |
| EBITDA | 325.7 | 361.8 | 369.6 | 2.2% | 13.5% | 647.0 | 731.4 | 13.0% |
| EBIT | 274.7 | 314.8 | 321.6 | 2.2% | 17.1% | 545.0 | 636.4 | 16.8% |
| Finance cost | (9.4) | (23.1) | (23.1) | -0.1% | 145.8% | (17.9) | (46.2) | 158.2% |
| Associates | 0.5 | 0.8 | 2.0 | 143.4% | 264.9% | 4.2 | 2.8 | -33.0% |
| PBT | 265.9 | 292.5 | 300.5 | 2.8% | 13.0% | 531.3 | 593.0 | 11.6% |
| Tax expense | (62.1) | (70.0) | (68.9) | -1.6% | 10.9% | (123.1) | (138.9) | 12.9% |
| Reported PATMI | 203.7 | 222.5 | 231.6 | 4.1% | 13.7% | 408.3 | 454.1 | 11.2% |
| EI | (0.1) | (0.0) | (0.6) | N.M. | N.M. | (0.1) | (0.6) | N.M. |
| Core PATMI | 203.8 | 222.5 | 232.2 | 4.4% | 13.9% | 408.4 | 454.7 | 11.3% |
| Core EPS (sen) | 6.0 | 6.5 | 6.8 | 4.4% | 13.9% | 12.0 | 13.3 | 11.3% |
| ppts chg | ppts chg | ppts chg | ||||||
| EBITDA margin | 58.8% | 61.2% | 60.8% | -0.42 | 1.99 | 59.1% | 61.0% | 1.91 |
| EBIT margin | 49.6% | 53.3% | 52.9% | -0.36 | 3.31 | 49.8% | 53.1% | 3.30 |
| Core PATAMI margin | 36.8% | 37.6% | 38.2% | 0.55 | 1.41 | 37.3% | 37.9% | 0.63 |
Volumes
| 2QFY24 | 1QFY25 | 2QFY25 | QoQ | YoY | 1HFY24 | 1HFY25 | YoY | |
|---|---|---|---|---|---|---|---|---|
| Container (TEU m) | 2.72 | 2.69 | 2.88 | 7.1% | 5.9% | 5.40 | 5.57 | 3.1% |
| Transhipment | 1.53 | 1.51 | 1.68 | 11.3% | 9.8% | 3.01 | 3.19 | 6.0% |
| Gateway | 1.19 | 1.18 | 1.20 | 1.7% | 0.8% | 2.39 | 2.38 | -0.4% |
| Conventional (mt) | 2.92 | 2.95 | 2.75 | -6.8% | -5.8% | 5.68 | 5.70 | 0.4% |
Bursa, HLIB Research
ESG Snapshot
The goal of this section is to provide an overview of Westports’ ESG trends and developments. Information presented here are from financial year FY24 and will only be updated when new data are available. Overall, we find the port operator group has no glaring ESG issues as most indicators met expectations.
| F4GBM Index member | : | Yes |
| FTSE Russell ESG rating | : | ★★★★ |
| MSCI ESG rating | : | N.A. |
Environmental (E) indicators
- Established Glide Path 2050: Westports’ Decarbonisation Strategy, a pathway to Westports to achieve net zero emission by 2050.
- Westports targets 30% reduction in net CO2e (Scope 1) per TEU emission intensity by 2035 (base year 2021) and commits to achieving Scope 1 operatoinal net-zero carbon emissions by 2050, in line with the nation’s commitment to achieving net-zero greenhouse gas emissions by 2050.
- The intermittent targets are overall net CO2e/TEU of 14.4kg by 2030, 12.8kg by 2035, and subsequently below 6.0kg by 2050 (base year 2021 was 18.33kg).
- GHG emission intensity per revenue stood at 116.5 tCO2e/RMm (vs FY23: 128.1 tCO2e/RMm).
- Electricity consumption intensity per revenue stood at 25.6 MWh/RMm (vs FY23: 26.1 MWh/RMm).
- Diesel consumption intensity per revenue stood at 22.3 kL /RMm (vs FY23: 24.0 kL/RMm).
- Water consumption intensity per revenue of 682.6 L/RMm (vs FY23: 706.3 L/RMm).
- Waste generation intensity per revenue was 0.30 tonnes/RMm (vs. FY23: 0.32 tonnes/RMm).
- Planted 10,000 mangrove trees as of end-2024, comprising six diverse species since 2015.
- Installed solar capacity: 7,864 kWp, generating 3,880,729 kWh in 2024. For 2025, targeting an additional 6.3 MWp, expects to generate 8,000 MWh annually.
- Terminal trucks: Full electrification by 2050, with gradual adoption starting in 2040.
- Rubber-tyred gantry cranes: Diesel units phased out by 2043; 90% of fleet electrified by 2050.
- Tug and pilot boats: Diesel use aligns with container growth; full electrification by 2050.
- RECs & Carbon Offsets: RECs adoption starts in 2031, increasing 5% annually to reach 100% by 2050.
Comments: Westports has already established a clear strategy to achieve the group’s targeted net zero emissions by 2050, which is in line with Malaysia’s government commitment towards net zero GHG emission by 2050. Major parts of the strategy is to go through electrification, solar installation and acquiring REC.
Social (S) indicators
- Has a talent retention rate of 88.3% (vs FY23: 89.3%).
- Composition of female Board of Directors stood at 54.5% (vs FY23: 50.0%).
- Females accounted for 19.4% of senior management level (vs FY23: 14.3%).
- Females accounted for 14.9% of middle management level (vs FY23: 13.3%).
- Females accounted for 5.6% of total employee (vs FY23: 5.0%).
- The average training hours per employee was at 25.2 hours (vs FY23: 24.4 hours).
- Total incidents and accidents occurred in FY24 was 697 cases (vs FY23: 791 cases).
- Total contribution to community development programmes was RM3.1m in FY24 (vs FY23: RM1.6m).
- In 2024, Westports also pledged continued dedication to community investment. The group will allocate a minimum of RM1.0m annually to Pulau Indah.
- Westports will commit at least an hour of all its management, office staff and senior operational staff’s time to the port operator’s CSR initiatives during working hours.
- In the coming years, the company will replant almost 100 hectares of mangrove. To this effect, WMSB has entered into a Memorandum Of Collaboration with the Yayasan Hijau Malaysia And Menteri Besar Selangor (Pemerbadanan) on the Selangor Environmental Conservation and Cultural Alliances (SECCA), which will nurture an inclusive ecosystem for mangroves and marine wildlife.
Comments: Westports has a naturally high male composition under its employment, mainly due to its nature of business. However, the group has relatively high percentage of female composition in BOD. The group is also committed to contribute back to the community of Pulau Indah, where the port operation is located.
Governance (G) indicators
- Board size of 11 directors (vs FY23: 10 directors) where 63.6% were independent (vs FY23: 60.0%) with an average tenure of 5.5 years (vs FY23: 5.1 years). Meeting attendance was 97.4% (vs FY23: 100.0%).
- Independent directors form 100% / 66.7% / 100% / 100% of audit / risk / nomination & remuneration/ sustainability committee (vs FY23: 100% / 66.7% / 75.0% / 100%).
- Has a Executive Director pay ratio of 91.6x (vs FY23: 114.6x).
- The percentage of executive & non-executive directors pay to the group’s revenue stood at 0.10% (vs FY23: 0.11%).
- Strict zero-tolerance policy against all forms of corruption and bribery, as outlined in the Group’s comprehensive Anti-Corruption and Bribery Policy.
- Whistleblowing Policy, allows employees to report suspicions of irregularities openly or anonymously, ensuring confidentiality and protection from retaliation.
Comments: Overall, BOD complies with the recommendations set by Bursa Malaysia. While two founding family members serve on the Board, both possess relevant experience and industry knowledge to effectively lead the group. Their presence is balanced by other independent directors, providing appropriate checks and balances. The Board comprises a mix of long-serving members, who offer continuity and institutional knowledge, and newer members, who contribute fresh perspectives and ideas.
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Stock rating guide
Sector rating guide
The stock rating guide as stipulated above serves as a guiding principle to stock ratings. However, apart from the abovementioned quantitative definitions, other qualitative measures and situational aspects will also be considered when arriving at the final stock rating. Stock rating may also be affected by the market capitalisation of the individual stock under review.
