Maybank initiates buy call for Westports

Business & Markets 2013
Written by Jonathan Gan at theedgemalaysia.com
Wednesday, 04 December 2013 12:40
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KUALA LUMPUR (Dec 4): Maybank IB Research has initiated coverage on
Westports Holdings with a "buy" call and a target price (TP) of RM2.70.
In a note today, the research house commented that Westports is favoured due
to its high container growth rate and that it stands out among its regional peers.
“We like Westports for the following reasons: i) ASEAN container growth rate is
among the world’s fastest and ii) Westports stands out among its regional peers
given the quality and size of its assets, backed by a high ROE of 28% for FY
13-14,” said analyst Lee Yen Ling in the note.
Westports is well positioned to ride on the growth of intra-Asia, Asia-Africa and
Asia-Australasia trade routes due to its location in the Strait of Malacca
The research house believes that the commencement of the P3 alliance would
have little impact on the Port of Tanjung Pelepas in Johor.
“The volume loss would be mitigated by new non-P3 services, which CMA
CGM will introduce progressively in 2014-15. Hence, the net loss could be only
2% of Westports total volume,” said Lee in the report.
The research house estimates EPS CAGR of 6% based on their 3 year
throughput CAGR of 7%.
The research house also forecasts a net dividend yield of 4.2% for FY14 on
Westports' dividend payout policy of 75%.
.
“We still see upside to our valuation, coming from a potential container tariff
hike, which we have yet to impute into our earnings model,” it said
At 11:43am today, Westports' share price remains unchanged at RM2.53