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Westports eyes capacity expansion with land acquisition

Monday, 10 February 2020 | 16:00

Westports Holdings Bhd wholly-owned subsidiary, Westports Malaysia Sdn Bhd has entered into a conditional sale and purchase agreement with Pembinaan Redzai Sdn Bhd to acquire 146.4 hectares of leasehold land in Klang for RM393.96 million cash.

In a Bursa filing, Westports said the proposed acquisition would help facilitate an increase in container terminal (CT) capacity, in order to keep up with an exepected increase in throughput demand.

“Westports Group’s current CT facilities, comprising CT 1 to CT 9, is operating at a utilisation rate of approximately 77% of its total terminal handling capacity and the group expects its current CT facilities to reach near full utilisation within the next few years.

“The proposed acquisition and the proposed expansion would also cater for the expected long term growth in the demand for port services as it is expected to increase Westports’ total handling capacity to 28 million TEUs per annum upon its completion,” it said.

The proposed acquisition will be funded via internally generated funds and/or bank borrowings, and the entire proposed expansion is envisaged to be undertaken over a period of 25 years.

The total development cost for the entire proposed expansion of the group’s CT facilities comprising CT 10 to CT 17, is expected to be about RM10 billion over a period of 25 years.

This will be funded through internally generated funds, bank borrowings and/or proceeds to be raised from fund-raising exercises.

The proposed acquisition is expected to be completed by the fourth quarter of 2020.

Westports shares were suspended from trading from 2.30pm today, but at the noon trading break, the group’s shares were 1.01% or four sen lower at RM3.92 with 647,300 shares done.

Trading for the counter will resume from 3.30pm.

Meanwhile, in a separate filing, the group saw a 13.8% decline in net profit to RM125.4 million for its fourth quarter ended Dec 31, from RM145.5 million a year before, due to write off of assets arising from a vessel incident in November last year when a berthing container vessel making contact with two of its ship-to-shore cranes.

Revenue, however, increased 8.3% to RM452.8 million, from RM418 million previously due to growth in container volume and the implementation of container tariff hikes with effect from March 1, 2019.

Westports also achieved another consecutive record-breaking container throughput level in the fourth quartter by handling 2.82 million twenty-foot equivalent units (TEUs). Transhipment containers were at 1.84 million TEUs whereas gateway boxes, which support domestic economic activities, improved to 0.98 million TEUs.

For FY19, Westports posted a 10.8% increase in net profit to RM590.9 million, from RM533.5 million in FY18. Revenue also increased to RM1.78 billion, from RM1.61 billion a year ago.

The group handled a record throughput of 10.86 million TEUs of containers in 2019. The increased volume of 14% over the previous year has been contributed by transhipment containers, which improved to 7.23 million TEUs, while gateway volume increased to 3.63 million TEUs.

The group declared a second interim dividend of 6.26 sen per share amounting to RM213.5 million is to be paid on March 3, 2020.

In a statement, group managing director Datuk Ruben Emir Gnanalingam shared that Westports has sustained its favourable container throughput growth momentum due to strong support from its clients.

“ The growth at the intra-Asia segment has also underpinned the broad-based momentum to support the company towards achieving the container volume growth of 14%, which is well above the industry’s average. Westports has accommodated a greater proportion of Ultra Large Container Vessels at our berths as the liner industry deploys ever more and ever bigger container vessels,” he said.

Looking ahead, Ruben said Westports is expecting a modest container volume growth in 2020 due to the enlarged throughput base and cautious industry outlook.
Source: Sun Daily

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