KUALA LUMPUR: Analysts remain positive on Westports Holdings Bhd after the port operator reported a stronger net profit for the first quarter of 2023 (Q1’23).
According to a filing with Bursa Malaysia last Friday, the port operator’s net profit rose by 21% year-on-year to RM183.59 million in the quarter ended March 31, 2023, from RM151.85 million previously, attributed to the corporate tax rate reverting to 24% compared with the one-off Prosperity Tax in Q1’22.
Revenue decreased marginally to RM512.92 million from RM516.36 million previously, due to lower value-added services, particularly storage revenue.
In a separate statement, the largest listed port operator in the country said its container segment contributed 86% to total revenue by handling a throughput volume of 2.55 million twenty-foot equivalent units in Q1’23.
In a note, MIDF Research said gateway container volume growth is expected to remain resilient, supported by competitive local exports and foreign direct investments.
However, there is still a potential risk of global inflationary pressures impacting transhipment container demand as goods consumption in the Western region softens.
“The management maintains their guidance of low single-digit growth in container volume for financial year 2023 (FY23).”
Meanwhile, negotiations on 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 (H2’23), 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.
Hong Leong Investment Bank Bhd (HLIB), meanwhile, remained cautious about Westports’ outlook, as it anticipates global trade to remain sluggish in FY23, 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 negatively impact port operators like Westports.
“With regard to the Westports 2 expansion, the government is aiming to finalise the concession agreement in H2’23 and we gather that progress is advancing smoothly,” it said in a yesterday.
HLIB has maintained its “hold” call on Westports, with a lower target price of RM3.52 a share.
On Bursa Malaysia today, Westports closed 8 sen or 2.3% higher at RM3.60, with 204,900 shares traded. – Bernama