Hot Stock Westports dips 2.33% on tariff hike delay

by **Cals** Wed 23 Sep 2015, 20:45

Hot Stock
Westports dips 2.33% on tariff hike delay
By Chen Shaua Fui / theedgemarkets.com | September 23, 2015 : 12:10 PM MYT

KUALA LUMPUR (Sept 23): Shares in Westports Holdings Bhd ([You must be registered and logged in to see this image.] Valuation: 0.90, Fundamental: 1.45) dipped as much as 10 sen or 2.33% to RM4.20, after the tariff hikes for the port was delayed again to Nov 1.
Westports pared losses to trade at RM4.22, still shed 8 sen or 1.86%, with a rather thin volume of 433,900 units exchanging hands as at 11.41am.
The port operator had said in a filing yesterday (Sept 22) that Port Klang Authority has delayed the implementation of the Phase 1 revised container tariff to Nov 1 for a second time.
The revised tariff was originally slated to be effective from Sept 1, but this was postponed to Oct 1 prior to this announcement.
However, AlliancesDBS said the decision had limited impact towards Westports' earnings forecast.
“In our forecasts, we assume Westports will immediately raise charges for only the gateway containers in FY15, and raise charges for the transshipment containers by 5% per annum (p.a) only from FY16F onwards.
“As such, the impact from delays in implementing the revised tariffs by only two months (i.e. from Sep to Nov) is small, leading us to shave our FY15 earnings by 2%, while leaving FY16-17 earnings unchanged.”
The research firm maintained a “hold” call for the counter with an unchanged discounted cash flow-based target price of RM4.40, as the earnings cut is small and is for only a single forecast year (i.e. FY15).
“We still like the stock as a proxy to the ASEAN growth story, but retain our ‘hold’ rating due to limited upside to our TP.
“Investors should consider accumulating the stock if there is a selldown pursuant to this announcement. Key risk for the stock would be if the government continues to postpone tariff hike indefinitely,” tt added.
(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)