However, some remain cautious about its outlook on expectations that global trade will remain sluggish this year.
In a filing to Bursa Malaysia last Friday, the port operator reported a RM183.59 million Q1 profit, up 21% from the RM151.85 million recorded in the same period of 2022.
The country’s largest port operator attributed the better performance to lower taxes. The one-off Prosperity Tax in Q1 2022 of 33% was introduced in 2022 but has since been replaced by the lower corporate tax of 24%.
This has enabled the company to record a higher profit despite a marginal drop in its revenue from RM516.36 million in Q1 2022 to RM512.92 million a year later.
The port operator said its container segment contributed 86% to its total revenue by handling a throughput volume of 2.55 million twenty-foot equivalent units (TEUs) in Q1 2023.
MIDF Research has forecast resilient growth in gateway container volume on the back of competitive local exports and foreign direct investment, according to Bernama.
However, the research house said, the potential of a global inflation remains. “This will have an impact on transshipment container demand as goods consumption in the West softens,” it was quoted as saying.
The Westports management expects growth in container volume to remain in the low single-digit this financial year FY2023.
“Meanwhile, negotiations concerning the expansion of Westports 2 are progressing favourably and the signing of the concession agreement is anticipated to take place in the second half of 2023 (H2 2023),” the research firm said.
As such, MIDF Research has upgraded its call on Westports’ shares to “buy” with an unchanged target price of RM3.90, and has made no changes to its earnings estimates as the port operator’s Q1 2023 results were in line with expectations.
However, Hong Leong Investment Bank Bhd (HLIB) remains cautious about Westports’ outlook, as it anticipates global trade to remain sluggish this year, amid economic uncertainties.
“The recent banking crises in the West are likely to erode consumer confidence, leading to reduced spending and consequently lower trade volumes that will have a negative impact on port operators like Westports,” HLIB said.
“With regards to the Westports 2 expansion, the government is aiming to finalise the concession agreement in the second half of 2023 and we gather that progress is advancing smoothly,” it said in a separate note today.
As such, HLIB has maintained its “hold” call on Westports’ shares, with a lower target price of RM3.52 per unit.
At 11.32am, Westports shares rose six sen to RM3.58 with 63,700 units transacted.