In a note today, the research arm has expressed confidence in the terminal operator’s ability to successfully navigate oncoming challenges despite global trade uncertainties.

“Its mid- to long-term prospects remain supported by rising foreign direct investments (FDIs) in Malaysia and continued intra-Asia trade growth potential,” said Maybank IB.

It has upgraded its call on Westports to “buy” with a target price (TP) of RM3.68.

Year-to-date, the counter has dropped 43 sen (11.53%) from RM3.73 to RM3.30 as of noon break today.

Sustained growth

Westports’s container throughput increased by 8% year-on-year (y-o-y) for the second quarter of this year (Q2 2023), rising slightly from a 7% y-o-y growth in Q1 2023.

Maybank IB expects this growth trend to continue into Q3 2023, with a year-end target of 6% y-o-y growth for 2023.

However, it noted that Q3 2023 profits could be weighed down by increased operating costs relating to labour and fuel expenses.

“Higher electricity costs due to an increase in ICPT (imbalance cost pass-through) to 17 sen/kWh from 3 sen is also expected to impact Westports’s profitability,” it said.

In Q1 2023, labour, fuel and electricity costs accounted for 34%, 18% and 7% of Westports’s operating expenses respectively.

Maybank IB remains optimistic on the group’s outlook as sustained growth in intra-Asia trade and rise in foreign direct investment (FDI) in Malaysia will support its gateway volume growth.

At noon break, Westports’s share price was up by six sen or 1.85% at RM3.30, giving it a market capitalisation of RM11.25 billion.