KUALA LUMPUR (June 16): The recently revised port tariffs are expected to boost Westports Holdings Bhd (KL:WPRTS), however geopolitical risks and trade uncertainties tied to the Israel-Iran conflict may weigh on regional shipping activities, said analysts.  

The Malaysian government has recently approved a staggered 30% tariff hike for Port Klang, effective from June 15 to January 2027.

In a research note on Monday, RHB Investment Bank Bhd highlighted that ongoing tensions in the Middle East could disrupt regional seaborne trade due to potential port congestion near conflict zones.

In addition, US reciprocal tariffs are expected to fuel inflation, potentially slowing global economic momentum and dampening trade volumes.

“Although Asia’s economic resilience and regional trade shifts may dampen the impact, the extent remains unknown until the trade tariffs are in full swing,” said the firm.

Despite these headwinds, research houses revised forecasts earnings upwards and noted that Westports is maintaining a conservative container growth forecast of 0% to 5%.

RHB Investment revised its earnings forecast for Westports upwards by 11% for FY2025 and FY2026, and 13% for FY2027, with a revised target price (TP) of RM4.90, including a 2% ESG premium.

Additionally, CIMB Securities said the tariff adjustment is a positive for Westports, as the container segment makes up 85.5% of its financial year 2024 revenue and arrives at an opportune time for its Westports 2 expansion.

While the firm expects a gradual earnings uplift, it noted that only about 25% of transshipment contracts are renewed annually, which means most of the benefit will materialise gradually, with limited earnings impact in the second half of 2025.

Out of 19 research houses looking at Westports’ stocks, 10 are on “buy” calls while nine are on “hold” recommendations, according to Bloomberg. The 12-month average target price is RM5.09.

CIMB raised its earnings forecast for Westports by 8% to 22% for FY2025 to FY2027, and a higher TP of RM5.10, projecting revenue to increase by 7% to 15% from higher tariffs. However, it flagged near-term pressure on gateway volumes as shipping lines adjust capacity in response to rising costs.

The Ministry of Transport approved the long-awaited tariff revision for the Port Klang Authority on Friday (June 13). Under the newly gazetted tariff structure, handling charges for a 20-foot equivalent unit (TEU) container will increase by 15% to RM345 (from RM300), effective June 15, the house noted.

This will be followed by a further 10% increase to RM375 effective Jan 1, 2026, and a final 5% hike to RM390 effective Jan 1, 2027. In total, this reflects a cumulative 30% tariff increase by January 2027, broadly in line with the previous round of container tariff hikes implemented between 2015 and 2018.