KUALA LUMPUR, July 29 (Bernama) -- Research firms are positive on Westports Holdings Bhd’s outlook on the back of strong gateway volumes from steady foreign investments.
In a filing with Bursa Malaysia last Friday, the port operator reported that its net profit improved to RM203.74 million in the second quarter ended June 30, 2024 (2Q 2024), from RM194.76 million in 2Q 2023, while its revenue rose by 6.0 per cent to RM552.99 million from RM542.64 million posted a year ago.
In a note, Hong Leong Investment Bank Bhd (HLIB) said that the port operator will gradually see an increase in transhipment volume as global trade improves when central banks begin lowering interest rates.
The investment bank noted that Westports’ terminal experienced yard congestion in 2Q 2024, partly due to the spillover impact from the port congestion in Singapore where some of the containers to Singapore were redirected to the port.
“This resulted in higher yard occupancy and consequently, higher value-added services revenue during the quarter,” it said.
The yard congestion started easing this month, which bodes well for the group as this enhances its capacity to handle higher volume ahead, especially in anticipation of a seasonally stronger 3Q 2024 when volume picks up ahead of the Christmas season.
Hence, HLIB maintained its ‘buy’ call on Wesports’ shares, raising the target price (TP) to RM4.89 from RM4.30 previously as it imputed a lower risk premium.
Meanwhile, MIDF Amanah Investment Bank Bhd (MIDF) maintained its forward earnings projections for Westports, given that the company’s results were in line with its expectations.
“We maintain our ‘neutral’ rating for the stock, with an unchanged discounted cash flow (DCF)-derived TP of RM4.30.
“Key potential positives for the stock include the possibility of a tariff increase exceeding expectations or an upward revision in management’s guidance for container volume growth,” MIDF said.
-- BERNAMA
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