WPRTS: Robust Operational Performance Underpins Steady Earnings for Port Operator
| Key Information Summary | |
|---|---|
| Investment Bank | TA SECURITIES |
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation | |
A leading port operator has reported a solid third quarter for 2025, with operational revenues and core profits broadly in line with expectations, driven by strong operational efficiencies and recent tariff adjustments.
The company’s third-quarter 2025 operational revenue reached MYR667 million, marking a 9.7% quarter-on-quarter and 16.4% year-on-year increase. This brought the nine-month 2025 operational revenue to MYR1.9 billion, up 11.9% year-on-year. The strong revenue performance was largely attributed to high restow requirements, primarily from the repositioning of empty containers back to the Far East, and a 15% tariff adjustment that became effective in July.
Consequently, core profit for 3Q25 rose to MYR273 million, a significant 17.6% quarter-on-quarter and 19.8% year-on-year increase. This performance lifted nine-month 2025 core earnings to MYR727 million, up 14.3% year-on-year, meeting 76% and 77% of the investment bank’s and consensus estimates, respectively.
Throughput and Trade Dynamics
Total throughput in 3Q25 stood at 2.9 million TEUs, representing a slight 0.3% quarter-on-quarter dip but a healthy 6.3% year-on-year growth. This brought nine-month volumes to 8.4 million TEUs, up 4.2% year-on-year, falling within expectations at 77%. Growth was primarily fueled by a 7.8% year-on-year increase in transhipment volumes, while gateway volumes remained flat year-on-year. Geographically, intra-Asia trade continued to be the largest contributor, accounting for approximately 62% of total container volumes, despite a 3.2% year-on-year decline. This decline was attributed to earlier-year port congestion and service realignments, as shipping lines reallocated capacity to more profitable front-loading opportunities in the first half of 2025.
Future Outlook and Valuation
Despite various external headwinds, including the potential impact of the US Government’s shutdown and cumulative effects of recent trade tariff changes, global container demand and major consuming economies have remained resilient. Asia’s economic dynamism, regional trade diversification, and the current operating model of major liner alliances are expected to continue underpinning steady transhipment activity. The company maintains its conservative guidance of low-to-mid single-digit container volume growth for the full year 2025.
The investment bank maintains its NEUTRAL recommendation, with an unchanged target price of MYR5.14. This target price incorporates a 2% ESG premium based on its ESG score of 3.1. The stock currently trades at an implied 17x FY26F P/E, which is one standard deviation above its historical P/E. Key downside risks include lower-than-expected TEU volume and higher-than-expected operating costs, while the converse represents upside risks.
