Westports Holdings Berhad anticipates higher container volumes in the second half of 2024 as port congestion eases, according to reports by MIDF Amanah Investment Bank (MIDF), Maybank Investment Bank (Maybank), CGS International Stock Broking House (CGS), and Kenanga Investment Bank (Kenanga).
MIDF Amanah Investment Bank (MIDF) maintains a NEUTRAL stance on Westports, with an unchanged target price of RM4.30. Westports' 2QFY24 results met expectations, with a core profit after tax (PAT) of RM203.7 million for the quarter, totalling RM408.2 million for the first half of the fiscal year. Container revenue grew by 6.6% year-on-year (YoY) in 2QFY24, supported by higher value-added services and a 6.2% YoY increase in gateway volume. Despite a 3.2% YoY decline in transhipment volume, the overall core PAT saw a 4.6% YoY increase. MIDF's rating reflects a stable outlook amid easing port congestion and steady operational performance.
Maybank Investment Bank (Maybank) has raised its target price for Westports by 21% to RM5.38, maintaining a BUY rating. The bank highlights Westports' strong 1HFY24 results, which align with expectations. The 7% YoY increase in container revenue and improved gateway cargo mix are positive indicators. Maybank remains optimistic about Westports due to sustained intra-Asia trade growth and increasing foreign direct investments (FDIs) in Malaysia, supporting its bullish outlook.
CGS International Stock Broking House (CGS) has downgraded its rating from HOLD to REDUCE, with a target price of RM4.01. CGS's cautious stance is attributed to potential profit-taking following recent share price gains. The report notes that Westports' 2QFY24 core net profit was flat compared to 1QFY24. While container and conventional revenues grew due to increased volumes and higher storage revenues, CGS is concerned about the impact of normalising port congestion. The yard occupancy rate fell to mid-80% in July 2024, and although a 10% increase in container liftings is anticipated for 2HFY24, uncertainties remain.
Kenanga Investment Bank (Kenanga) maintains an UNDERPERFORM rating on Westports with a target price of RM3.80. Kenanga's cautious outlook is influenced by prolonged geopolitical conflicts and disruptions in shipping routes. Despite an 8% YoY growth in core net profit for 1HFY24, Kenanga highlights challenges such as a 3% decline in transhipment volume and intermittent port congestion. Delays in key projects like the Westports 2 expansion and rising finance costs also weigh on the outlook.