Westports Holdings anticipates a recovery in container throughput in 2H26 as shipping lines adapt to the ongoing Iran conflict.
Westports Holdings Bhd, the container terminal operator at Port Klang, is expected to see container throughput recover in the second half of 2026 (2H26). Hong Leong Investment Bank Bhd (HLIB) stated that shipping lines are adjusting routes, and more vessels are returning to service as the Iran conflict continues.
In a research note issued after a site visit, HLIB mentioned that Westports has maintained its full-year throughput growth target in the low single digits. This target remains despite volumes falling 1% year-on-year in the first half of 2026 (1H26).
"The impact of the ongoing Iran conflict appears to have normalized, with more vessels being released from the Persian Gulf and returning to service, while global liners continue to realign their schedules and routes to adapt to the evolving situation," HLIB said.
"Against this backdrop, container throughput is expected to recover in 2H26, with volumes likely to be stronger than in 1H26."
For cargo owners and logistics providers that rely on Port Klang, the outlook signals more stable vessel schedules after a period of disruption.
HLIB indicated that Westports' outlook remains positive. It expects recovering throughput to offset a normalization in value-added services (VAS) revenue, such as container storage.
VAS made up a record 30.7% of container revenue in the second quarter of 2026 (2Q26). Higher storage volumes and a tariff increase in January supported this share.
"To improve operational efficiency, Westports has been actively clearing long-staying containers, particularly e-waste. Consequently, we expect VAS contributions to gradually normalize by year-end," the firm stated.
Clearing these long-staying boxes has already freed up space at the terminal. HLIB noted that yard occupancy has improved to 70% to 80%. This leaves Westports better positioned to handle ad-hoc transshipment volumes, meaning cargo moved between vessels at the port on an unscheduled basis. These volumes are expected to help offset the anticipated moderation in VAS contribution.
The added yard capacity puts the port in a better position to absorb sudden shifts in cargo flow, a key factor for shippers and forwarders managing tight delivery windows.
Regarding costs, HLIB expects operating expenses to remain stable compared with 2Q26. Westports' two-year Green Electricity Tariff subscription supports this view because it helps hedge against swings in electricity-related charges.
Diesel costs are also expected to stay stable despite a recent rebound in market prices.
HLIB mentioned that the minimum wage increase to RM2,000 in June 2027 should be manageable. Westports' current minimum salary is already RM1,900. The firm estimated the impact at 5% of total staff costs, which aligns with the annual rise in staff costs.
Westports' long-term expansion plans continue to advance. Dredging and land reclamation for the CT10-CT13 port expansion project are about 70% complete.
Wharf and yard construction is expected to begin in 2027, subject to finalizing the plans.
Capital expenditure is projected at RM700 million in 2026. It is expected to rise to between RM1.1 billion and RM1.4 billion in 2027 and 2028 as the project enters the equipment acquisition phase.
The expansion is set to strengthen Westports' long-term capacity to serve rising trade volumes through Port Klang.
HLIB maintained its "Buy" call on Westports with a target price of RM7.15.
The firm also flagged potential for an earnings forecast upgrade. It noted that Westports' 1H26 results had already reached 51.7% of its full-year earnings estimate.
With throughput expected to recover, costs held in check, and expansion works progressing, Westports enters the second half of 2026 positioned for steady momentum across its operations.