Westports’ FY15 container volume lowered to seven pct — Analysts

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Maybank IB Research notes that amid the volatility in foreign exchange and oil prices, global container trade indicators (GDP forecasts, PMI Index) still point towards positive growth in 2015 for Westports. — Bernama photo

KUCHING: Westports Holdings Bhd’s (Westports) financial year 2015 (FY15) container volume growth forecast has been lowered by analysts to seven per cent from nine per cent previously, 11 per cent in the first nine months of 2014 (9M14).

According to the research arm of Maybank Investment Bank Bhd (Maybank IB Research), it lowered its projections due to Maybank-KE Economics’ slightly lower gross domestic product (GDP) growth expectations of 6.4 per cent and five per cent for Asia (ex-Japan) and Malaysia (from 6.5 per cent and 5.2 per cent) and its lower throughput/GDP multiple assumption of 0.8-fold (from one-fold).

Maybank IB Research noted that amid the volatility in foreign exchange and oil prices, global container trade indicators (GDP forecasts, PMI Index) still point towards positive growth in 2015.

“Elsewhere, lower diesel price and an unlikely electricity hike in 2015 will also lead to cost savings for Westports,” it said.

However, the impact to earnings is muted as the research arm lowered its industrial diesel price assumption to RM2.10 per litre (minus 19 per cent in 9M14 at RM2.50 per litre) and remove its five per cent electricity hike expectation for 2015.

It noted that diesel and electricity account for 14 per cent and four per cent of Westports’ total costs respectively.

“We believe the container tariff hike could materialise in the next few years as the tariff hike for conventional cargoes was already implemented in 2012 and there has been norevision to the container tariffs since 2001 (despite the cost inflation),” the research arm said.

The research arm maintained its ‘buy’ recommendation on Westports.

“Additionally,with the S$/RM strengthening, tariff gap between PSA and Westports have widened and this could allow Westports to raise its transhipment charges in 2015-16,” it said.