sssAnalysts lowered Value-Added Services assumption as it is expected to taper off in 3QFY22 and have lowered container volume assumption as Westports Holdings management expects a slight decline this year (previously flattish).
"We have made some changes to our estimates to reflect our latest view on Westports. FY22E/FY23F/FY24F core PAT were revised down to RM551.2m (-14.6%)/RM702.2m (-9.7%)/RM770.3m (-9.6%).
Assuming a flat volume for 2HFY22, we expect Westports to handle 10m TEUs (-3.9%yoy) in FY22E, before staging growth of 10.4m TEUs (+3.9%yoy)/10.9m TEUs (+4.8%yoy) in FY23F/FY24F.
"Our fuel costs estimates are also higher at -RM190.2m/- RM140.6m for FY22E/FY23F. We still maintain our BUY call, but with a revised DCF-derived TP of RM4.00 (WACC: 7%, g: 2%) (from RM4.45)," says MIDF.
The analyst firm says the key downside risks for Westports are a reduction in transhipment calls as shipping lines focus on routes that yield higher rates and a potential decline in global container volume as inflationary pressure could affect consumption.
Transhipment volume drop
Higher VAS contribution uplifted the operational revenue to RM1.03b (+4.3%yoy), despite the container throughput declining to 4.88 TEUs (-8.1%yoy) in 1HFY22.
Transhipment volume dropped to 2.97 TEUs (-12.4%yoy), while gateway was flat at 1.91 TEUs. PBT fell to RM468.7m (-8.0%yoy) owing to the surge in fuel cost which made up 23% of the cost mix (1HFY22: 15%).
Core PAT of RM313.9m (-13.9%yoy) saw a significant decline because of prosperity tax. Note that there was a RM20m insurance reimbursement in 1HFY21 which we have excluded in deriving the core earnings.
MIDF says it maintains a BUY call on Westports.
"We still maintain our BUY call, but with a revised DCF-derived TP of RM4.00 (WACC: 7%, g: 2%) (from RM4.45)."