KUALA LUMPUR (May 8): CGS-CIMB Securities has maintained its “hold” rating for Westports Holdings Bhd at RM3.52 with a lower target price (TP) of RM3.52 (from RM3.57), and said the port ooerator’s core net profit of RM179 million for the first quarter ended March 31, 2023 (1QFY2023) was broadly in line at 24% to 25% of the house and Bloomberg consensus estimates for FY2023.

In a note on Saturday (May 6), the research house attributed its “hold” rating to uncertainty over the terms of the new concession agreement that is currently being negotiated with the government.

“We believe that Westports’ concession will be extended beyond 2054, but we do not know if the government will agree to allow Westports to increase port tariffs to levels that would make the ‘Westports 2’ project financially viable. This is the key downside risk to the stock.

“Upside risks include the potential for marine and conventional tariff increases in FY2024 that we have not incorporated into our model.

“Our discounted cash flow-based TP of RM3.52 is slightly reduced on various housekeeping adjustments,” it said.