This article first appeared in The Edge Malaysia Weekly on November 13, 2023 - November 19, 2023

Westports Holdings Bhd has clearly weathered the global supply chain disruption, continuing the legacy of its late founder Tan Sri Gnanalingam Gunanath Lingam.

The port operator was already on a solid growth path even before the Covid-19 pandemic. It posted its highest profit after tax (PAT) of RM808.2 million in the financial year ended Dec 31, 2021 (FY2021), boosted by insurance compensation of RM73 million.

While Westports’ growth momentum in PAT tapered off in FY2022, as PAT declined 13% year on year (y-o-y) to RM699.6 million — hampered by higher fuel cost, lower sundry income and a one-off prosperity tax — revenue grew 2% y-o-y to RM2.1 billion.

Westports, which together with Northport makes up Port Klang, has seen its earnings grow at a compound annual growth rate (CAGR) of 5.8% in the last three years (2019-2022). It made a PAT of RM654.5 million in FY2020 and RM590.9 million in FY2019.

According to the The Edge Billion Ringgit Club (BRC) awards methodology, Westports’ adjusted weighted return on equity (ROE) over three years (2020-2022) was 23.9%, the best among peers in the transportation and logistics sector. Its ROE grew from 24.3% in FY2020 to 27.1% in FY2021, offset by a decline to 21.9% in FY2022.

Westports is no stranger to The Edge BRC awards. Like last year, it again took home the same two awards in the transportation and logistics sector — for the highest ROE and highest growth in PAT over three years.

Datuk Ruben Emir Gnanalingam Abdullah, executive chairman and group managing director of Westports, attributes the group’s achievement to his father, fondly known as Tan Sri G, who passed away at age 78 on July 11 this year.

“We had the privilege of having Tan Sri Gnanalingam and his lifelong contribution in starting, building and establishing Westports from what was essentially an undeveloped island [in Selangor] to ultimately one of the biggest and most competitive mega transhipment hubs in Southeast Asia.

“We will endeavour to crystallise his vision further, as the road map to expand our container terminals beyond the existing Container Terminal 9 (CT9) is already in place. Expanding the container terminal would also create long-term better opportunities for Pulau Indah residents and beyond,” says Ruben, when announcing the group’s 2QFY2023 results on July 27.

The 46-year-old took over the role of executive chairman on July 20.

In 2017, Tan Sri G was named Value Creator: Most Outstanding CEO by The Edge BRC for his visionary leadership excellence in transforming Westports into Port Klang’s leading terminal operator.

“Close to Tan Sri’s heart is the well-being of the Pulau Indah community. Westports has created employment opportunities for the local residents and beyond. Approximately 41% of our employees are Pulau Indah residents,” says Ruben.

The group also rewards shareholders with regular dividends. It declared a dividend of 16.2 sen per share in FY2022 compared with 15 sen in FY2021, 11.5 sen in FY2020 and 13 sen in FY2019. Westports has implemented a dividend payout ratio of 75% on its PAT since its listing in 2013, with the exception of 2020 when the ratio was temporarily reduced to 60% due to prudent Covid-19 precautionary measures.

In the immediate future, Westports is projecting a low single-digit positive container throughput for 2023. The forecast nevertheless entails a cautionary note as global economic momentum could be affected by various potentially unfavourable factors, such as higher inflation, interest rates and volatile markets.

Westports’ container throughput slipped 3% to 10.05 million TEUs (twenty-foot equivalent units) last year, from 10.4 million TEUs in 2021 and 10.5 million TEUs in 2020. It handled a record 10.86 million TEUs in 2019.

In a July 28 report, CGS-CIMB Research noted that for 1H2023, Westports’ container volume rose a healthy 7.4% y-o-y, partly aided by the low 1H2022 base that had been affected by the spillover effect of the Klang Valley floods in late 2021 and yard congestion at the time.

“We retain our FY2023 volume growth forecast of 6.7%, as y-o-y growth should moderate in 2H2023, given the higher base in 2H2022 and Westports’ expectation that the majority of the empties repositioning has been completed,” it said.

Shares in Westports are tightly held by Pembinaan Redzai Sdn Bhd, with a 42.42% stake. Other substantial shareholders include Hong Kong’s CK Hutchison Holdings Ltd via South Port Investment Holdings Ltd (23.55%), the Employees Provident Fund (9.109%) and Kumpulan Wang Persaraan (Diperbadankan) or KWAP (6.859%).

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