Turmoil from US tariffs to weigh on Westports

PETALING JAYA: Westports Holdings Bhd’s earnings for this year may be impacted due to US trade policy and geopolitical uncertainty, analysts say.

Maybank Investment Bank Research (Maybank IB Research), which has downgraded Westports to a “hold” from a “buy”, said potential tariff disruptions and geopolitical uncertainty may weigh on global trade and foreign direct investment, which are key drivers of container volume.

“While intra-Asia container trade remains more resilient than westbound routes, rising policy and trade-related turmoil could cloud the investment outlook. With around two-thirds of Westports’ volume tied to intra-Asia trade, this offers some defensiveness.

“However, foreign investment decisions may be delayed amid shifting supply chains and growing protectionism, potentially weighing on container demand growth,” the research house said in a report.

Maybank IB Research said Westports’ container throughput is forecast to grow at a more conservative 2% a year from this year to 2027.

“Sensitivity-wise, every one percentage point drop in transhipment growth reduces 2025 to 2027 estimated core profit and target price by about 1%, while a one percentage point decline in gateway volume cuts profit between 1% and 3% and target price by about 3%,” the research house said.

“We lower our discounted cash flow-derived target price for Westports to RM4.78 from RM5.39 after cutting our earnings forecasts for this year till 2027 by 1%,2% and 5% respectively,” it said.

Last week, Westports announced plans to implement its dividend reinvestment plan by May, pending approval.

Based on earlier guidance, Maybank IB Research said the the plan span five years.

“We estimate potential annual dilution of less than 5% under full uptake, depending on issue price and subscription. Our forecasts reflect a dividend payout ratio of 75%, translating into a dividend yield of more than 4%. We also expect updates on tariff revisions soon. Our estimates assume a 15% tariff hike in both 2026 and 2027,” it said.

Westports is a key transhipment port along the Strait of Malacca and is also a key port in Malaysia serving the Klang Valley area.

Westports’ shares closed at RM4.43 yesterday, giving it a market capitalisation of RM15.11bil.