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KUALA LUMPUR (July 12): CGS-CIMB Research has maintained “Hold” on Westports Holdings Bhd at RM3.61 with a lower target price (TP) of RM3.50 (from RM3.78) and said the port operator on July 8 guided that 2Q22F container volumes are likely to be 6-7% lower yoy, continuing the 10% yoy decline seen in 1Q22.
In a note July 8, the research house said it has pencilled in a 5.2% yoy fall in FY22F volumes (versus 1% growth earlier) due to reduced transhipment calls at Westports and consumer spending slowdown.
The research house said on the opex side, diesel costs will likely pressure Westports too.
It said diesel prices averaged US$76/bbl in FY21 but averaged US$130/bbl in 1H22F.
It said spot diesel prices are circa US$150/bbl, hence the 2H22F diesel cost may average higher hoh and yoy.
CGS-CIMB raised its FY22F fuel price assumption by 21%, and by 15% for FY23-24F.
“We now expect FY22F diesel costs at 10% of revenue, vs. 6% of revenue in FY21.
“Retain Hold. We lower our DCF-based TP to RM3.50 due to the 10-14% EPS cuts in FY22-24F (lower volume assumptions and higher diesel costs),” it said.
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