Westports Holdings Bhd (KL:WPRTS) will see its growth accelerate as the port tariff increase takes effect starting next month, an analyst said on Thursday.
The pace of Westports’ earnings growth could rise about 17% in 2026 from 3% in 2025, according to Hong Leong Investment Bank’s (HLIB) latest estimates. The tariff hikes will also improve Westports’ cash flow, the house noted.
“We expect earnings sustainability and resilient volume movement despite concerns over a global trade slowdown,” said HLIB, which maintained its ‘buy’ call with a higher target price of RM5.30.
The Malaysian government has recently approved a revised port tariff structure in phases effective July 15 through January 2027. Container handling charges will rise by up to 30%, while charges for conventional and marine services will increase by as much as 15%.
Westports is currently operating at an optimal utilisation rate of 80% of its 14 million twenty-foot equivalent unit capacity. The company has also guided for mid-single-digit growth in container throughput through to 2027, with additional capacity projected to come online by mid-2028.
“The tariff adjustment is essential to support Westports’ ongoing infrastructure investments and ensure the sustainable growth and competitiveness of Port Klang,” HLIB said. The looming global slowdown is not expected to significantly affect market expectations for Westports, it added.
Coupled with the planned dividend reinvestment plan, HLIB said the revised tariffs will support the funding of Westports’ major expansion project to double its container handling capacity.
Westports has implemented the dividend reinvestment plan at a discount of less than 10% to the five-day volume-weighted average market price prior to the price fixing date.
Proceeds will help to support the company’s ongoing expansion plans over the medium term while maintaining its strong financial standing, helping to “enhance shareholder value”, HLIB added.
Shares of Westports have surged over 17% year-to-date. The counter last traded at RM5.34, up more than 0.7% from the previous close, giving it a market capitalisation of RM18.2 billion.
According to Bloomberg data, the stock currently has 12 ‘buy’ calls, seven ‘hold’ calls, and no ‘sell’ recommendations from research houses, with an average target price of RM5.33.
Tasco
Meanwhile, MIDF Research warned in a note on the ports-and-logistics sector that stricter overloading checks at federal ports across Peninsular Malaysia starting July 1 may lead to higher haulage costs due to tighter truck capacity.
Shippers may also face higher inland delivery rates and longer port turnaround times during the adjustment period, as operators recalibrate fleet deployment and routing.
Tasco Bhd (KL:TASCO), however, could be protected from sharp freight rate increases by a new clause that allows price revisions if market rates rise more than 10% above the tendered rate, the house noted.
Further, Tasco may also benefit from rising geopolitical risks and uncertainties that push customers towards shorter-term contracts that generally yield better margins, MIDF Research added.
Source: The Edge Malaysia