KUALA LUMPUR (Nov 5): CIMB Securities views the recent pullback as an opportune time for investors to accumulate shares of Westports Holdings Bhd (KL:WPRTS), given its expectations of record earnings between 2025 and 2027.
Westports will continue to be bolstered by the next two rounds of tariff adjustment alongside the Westports 2 expansion, where reclamation and dredging works are 35% complete, the research house said in a note.
"The stock has corrected 12% from its year-to-date high in early July, partly owing to concerns over the global trade outlook amid the US reciprocal tariff measures.
"We view this pullback as a buying opportunity for investors to accumulate and ride on potential record earnings in 2025-27, supported by the upcoming port tariff revisions," it said.
To recap, terminal handling charges for 20-foot containers increased by 15% to RM345 (from RM300) effective July 15, 2025, with subsequent hikes of 10% (to RM375) effective Jan 1, 2026, and finally 5% to RM390 on Jan 1, 2027.
The house also cited Westports' low single-digit volume growth target for 2026 to be supported by intra-Asia demand.
CIMB Securities project Westports to see a 3% container volume growth in 2025, implying flattish quarter-on-quarter (q-o-q) throughput in the fourth quarter of 2025, supported by a recovery in trans-shipment activities driven by new Ocean Alliance services and shipping alliance realignments.
"However, this will be partially offset by softer gateway volumes following stricter government measures on unauthorised electronic waste imports," it added.
Meanwhile, the first phase of Westports' CT10 terminal is slated to be operational by 2028, expanding its capacity by over 10%.
Once operational, CT10 will add approximately 1.6 million twenty-foot equivalent units (TEUs), an 11% increase, according to the research house. CT11 is expected to be completed approximately one year after the full completion of CT10, further enhancing Westports’ total handling capacity.
Westports' third-quarter earnings rose sharply on higher port tariffs, with CIMB Securities maintaining its 'buy' recommendation and target price of RM6.20, citing tariff-driven margin gains and sustained throughput growth.
For the quarter alone, core net profit rose 15% q-o-q and 17% year-on-year (y-o-y) to RM267 million, driven by a nearly 10% q-o-q jump in revenue following the phase-one tariff hike implemented in mid-July.
For the cumulative nine months ended Sept 30, 2025 (9MFY2025), the port operator’s core net profit climbed 13.5% y-o-y to RM722 million, meeting 76% of CIMB Securities’ full-year estimate.
Westports’ earnings momentum is increasingly supported by pricing rather than throughput, with the average revenue per TEU climbing 8.4% q-o-q to RM192.3, even as container volume stayed flat at 2.87 million TEUs.
The earnings before interest, taxes, depreciation, and amortisation (Ebitda) margin expanded to 64.6% in 9MFY2025, buoyed by lower fuel and electricity costs, the research house added.