Analysts Mixed On Westports Outlook

KUALA LUMPUR, Feb 20 (Bernama) -- Analysts are mixed on Westports Holdings Bhd’s outlook, with two investment banks offering differing perspectives.

AmInvestment Bank Bhd has maintained a “hold” recommendation on Westports despite the port operator’s financial year 2024 (FY2024) core net profit exceeding estimates by three per cent, largely due to lower costs. However, the bank believes the group’s throughput growth has normalised. It expects low single-digit growth despite Westports registering a record-high volume of 10.98 million twenty-foot equivalent units in FY2024.

While the bank views the company’s valuation as unappealing at this stage, it sees potential for re-rating if there is clarity on the timing and quantum of a tariff hike, in line with Westports’ Phase 2 expansion. “The target price (TP) remains at RM4.50 per share, based on a one-year forward price to earnings ratio of 16.5 times, and in line with its five-year average,” it said in a note.

In contrast, Hong Leong Investment Bank (HLIB) has remained upbeat on Westports’ long-term outlook, citing Westports’ strategic location.

“Currently operating at a high 80 per cent utilisation rate, Westports is expected to see single-digit growth until the completion of construction of eight new container terminals by mid-2028. We anticipate that the expected tariff revision in 2025 will boost earnings and help finance the expansion plans for (the container terminals),” it said in a note.

HLIB maintained its “buy” recommendation on Westports with an unchanged target price of RM5.00, derived from a discounted cash flow method.

At 10.34 am, Westports’ counter fell one sen to RM4.58, with 164,700 shares transacted.

-- BERNAMA