Affin Hwang downgrades Westports on recent price run, raises TP to RM4.22

KUALA LUMPUR: Affin Hwang Capital research is raising its FY19-21E earnings forecast on Westports Holdings Bhd and raising its target price to RM4.22 from RM4.20.

However, it is downgrading the counter to hold from buy given its recent share price run that resulted in lower upside.

Coming off the back of positive earnings results for 6M19, Westports’ management has raised its 2019 volume growth guidance to “high single digit” from 3-5% previously.

To recap, Wesports’ 6M19 core net profit rose 25.4% year-on-year (y-o-y) to RM306.5mil on the back of 11.6% higher revenue driven by a 17% increase in container volumes.

Westports’ management attributed the strong 6M19 container volume gains to higher port calls by Ocean Alliance, market-share gains, organic volume growth and the low base effect in 6M18.

“Overall, the earnings were within consensus and our forecasts, despite the higher-than-expected container volumes,” said Affin Hwang.

It added that Westports’ 2Q19 core net profit was 19% higher quarter-on-quarter (q-o-q) to RM166.3mil due to seasonality.

Moving into 2H19, it expects 2H19 earnings and container volume growth q-o-q and y-o-y to be relatively muted due to a higher base effect.

Source: TheStar