This article first appeared in The Edge Malaysia Weekly on March 10, 2025 - March 16, 2025

THE valuation of Westports Holdings Bhd (KL:WPRTS) has come under the spotlight following an agreement reached between a consortium led by BlackRock Inc and Hong Kong billionaire Li Ka-shing’s CK Hutchison Holdings Ltd on the acquisition of the latter’s port holdings around the world except for those in China and Hong Kong.

The deal, valued at US$22.8 billion including debts, is also for a 23.55% stake held by CK Hutchison in Westports.

Handling 10.98 million twenty-foot equivalent units (TEUs) in 2024, Westports is one of the largest ports in the Hutchison Port Holdings Ltd (HPH) ecosystem.

On March 4, CK Hutchison, which owns HPH, announced that the BlackRock, Global Infrastructure Partners and Terminal Investment Ltd (BlackRock-TiL) consortium had agreed to acquire HPH’s 90% equity interest in Panama Ports Company as well as an 80% effective stake in HPH’s subsidiary and associate companies owning, operating and developing a total of 43 ports in 23 countries.

Panama Ports Company owns and operates the ports of Balboa and Cristobal in Panama. These ports are not part of the Panama Canal.

The deal followed remarks by US President Donald Trump that China controlled Panama Canal and threatened to “take back” the 82km waterway connecting the Atlantic Ocean via the Caribbean Sea to the Pacific Ocean.

Through Pacific Port Investment Holdings Ltd, CK Hutchison owns a 23.55% stake in Westports, making it the second largest shareholder in the container terminal operator after Pembinaan Redzai Sdn Bhd with 42.42%.

On March 7, Westports was last traded at RM4.53 apiece, valuing the group at RM15.45 billion.

It is not known how much the deal values each of the terminal and port operators. However, Westports’ executive chairman Datuk Ruben Gnanalingam Abdullah confirms that the port is the second largest in HPH’s port ecosystem after Yantian Port in Shenzhen.

Yantian Port is not included in the deal between CK Hutchison and BlackRock-TiL. This makes Westports the largest container terminal in which BlackRock-TiL is acquiring a stake from CK Hutchison.

Talking to The Edge, Ruben downplays the possibility of Westports being valued much higher than its current market price.

“We are part of HPH ports, which is owned by Cheung Kong Holdings (CKH), which is Li Ka-shing’s holding company. We will still be part of HPH ports after this. It is just that the shareholder of HPH has changed,” he says.

At RM4.53 per share, HPH’s stake in Westports is valued at RM3.64 billion or the equivalent of US$824 million. This is just 3.6% of the valuation that BlackRock-TiL has agreed to pay for HPH’s stakes in the ports.

Of the 18 analysts who cover Westports, the highest target price ascribed to the port operator is RM5.50 apiece, by CIMB Securities, while the lowest is RM4.20 by UOB KayHian. At RM5.50, Westports is valued at RM18.8 billion.

How much of Westports’ valuation makes up the US$22.8 billion has yet to be ascertained.

Assuming Westports’ valuation makes up 4% of the deal, this means the HPH stake is valued at US$912 million. This would value Westports at US$3.87 billion, or RM17 billion, translating into RM4.99 per share.

At 5% of the deal, HPH’s stake in Westports would be valued at US$1.14 billion. At this valuation, the group would have a value of US$4.84 billion or RM21.35 billion, translating into RM6.26 apiece.

Raymond Yap, director, senior equities analyst at CGS International Securities Singapore, does not think that the deal would cause the market to re-evaluate Westports because HPH’s stake in the group is considered a minority stake.

“But maybe MSC (Mediterranean Shipping Company) will give extra volume to Westports, just a speculation at this point,” he says when contacted by The Edge.

TiL is the infrastructure investment business of MSC, the world’s largest shipping company, with a capacity to carry 6.43 million TEUs as at March 7. MSC has been using Singapore as its hub since the dissolution of the 2M Alliance with second-place Maersk Line in January.

2M Alliance had used Port of Tanjung Pelepas as its regional transshipment hub in Southeast Asia due to the port in southern Johor being partly owned by APM Terminals, the port operating company of Maersk.

Ruben also downplays the possibility of MSC doing a lot more business at Westports, following the deal with CK Hutchison. He says MSC will continue to use Singapore as its hub going forward, although it does have some business with Westports, mostly in local cargo.

When asked if MSC will be sending a lot more containers to Westports, Ruben says, “Not as a result of this deal. They will take time to develop their long-term strategy post-acquisition. That could take more than a year. Nothing will change until that is done. Their 24% stake in Westports is not their priority. Panama is.”

But one thing is for sure, Westports has benefited from its association with CK Hutchison. It gained access to advanced technology, IT systems and productivity benchmarks from HPH’s global port network.

The acquisition will also raise questions as to how BlackRock will position itself within Westports.

While the deal could lead to changes at the board level — potentially replacing Hutchison’s representatives with BlackRock appointees — historical precedent suggests BlackRock does not typically exert direct management control over its investments. It largely operates as a passive investor.

“That said, there have been exceptions where BlackRock has adopted a more activist stance, particularly in cases of shareholder engagement on ESG and governance issues,” says Sabariah Akhair, analyst at BIMB Securities Sdn Bhd. 

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