CITIGROUP has revised downward its net income estimate for Malaysia's Westports Holdings in fiscal years 2015 to 2017 by 5 per cent to 6 per cent despite the terminal operator handling a record 2.29 million TEU in the third quarter.
In a note to investors, the bank said the import drag from the weak Malaysian ringgit (MYR) - one of the weakest currencies globally this year - would hurt gateway volumes, and the deterioration in regional trade reflected in falling intra-Asia volumes would pull down transshipment volumes, IHS Media reported.
"The weaker (ringgit) is having more of an adverse impact on imports rather than stimulating export growth," the bank said.
Westports handled 76 per cent of Port Klang's total container throughput last year. It also increased by 15 per cent its tariffs on key container tariff items at the beginning of November. It was the first hike in tariffs in 14 years and was highly anticipated by the market. The tariff increase was originally scheduled to be introduced in September, with a second increase in September 2018.
"Reflecting the delayed tariff increase this year, weaker import-export volume trends and pressure on gateway-conventional yields, we have trimmed our low-end estimates further".
The bank said it now expects FY 2015 adjusted net income of MYR500 million (US$117.4 million), down 3.8 per cent year over year and 5 per cent below prior cons. Our revised estimates for FY 2016 and FY 2017 are 6 per cent below the prior cons.
"Given the depreciation in the (ringgit), we believe many investors are looking at Westports as a beneficiary of improved export growth. However, in our view, the impact on domestic consumption from the weak MYR (and the new GST tax) is outweighing any export stimulus.
"Deterioration in regional trade (with intra-Asia volumes down 5 per cent year over year in the third quarter) will also put pressure on transshipment volume," according to the bank.
Westports' adjusted net income declined 7.7 per cent in the third quarter, primarily because of higher tax expenses. Throughput rose 6 per cent to 2.29 million TEU, a quarterly throughput record, but revenue was flat as the throughput rise was offset by a drop of 5.4 per cent in revenue per TEU.
Transshipment volume grew 10.6 per cent following a strong first half when transshipment volumes increased 10.9 per cent. However, third-quarter gateway throughput sank 4.6 per cent.
PORTS
22 November 2015 - 20:27
Citigroup downgrades Westports outlook despite record volume
CITIGROUP has revised downward its net income estimate for Malaysia's Westports Holdings in fiscal years 2015 to 2017 by 5 per cent to 6 per cent despite the terminal operator handling a record 2.29 million TEU in the third quarter.
PORTS
22 November 2015 - 20:27
Citigroup downgrades Westports outlook despite record volume
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