Company Coverage
Westports Holdings (WPRTS MK): 2Q26: VAS Thrives Again
HOLD (Maintained)
Current price:
Target price:
Upside:
Previous TP :
RM6.69
RM6.50
-2.8%
RM6.10
Analyst
Highlights
- VAS and container yields positively contributed to Westports’ result beat, two quarters in a row. VAS surged to an all-time high, driven by higher storage charges coinciding with longer CDT, especially for long-lead containers like e-waste cargoes. Excluding these, container yields also expanded quicker than implied due to the new tariff (second phase effective Jan 26). These more than offset rising fuel costs, which materialised in Mar 26 onwards, but appear to have tapered down.
Rising yard congestion in July 26 is manageable, and we now assume gradual normalisation of VAS. Channel checks indicated that yard congestion spiked again in Jul 26 to 90-95% levels, but we believe management has taken measures to make it manageable. We upgrade our earnings/EBITDA forecasts by up to 6% respectively, as we now assume a more gradual pace of VAS normalisation. Maintain HOLD with a higher target price of RM6.50.
Analysis
2Q26 beat our/consensus expectations for the second quarter in a row, with 1H26 comprising 58% of our/consensus forecasts. The positive deviations were, again, higher-than-expected Value-Added Services (VAS) and container yields, similar to 1Q26. For the first time, quarterly VAS breached above the RM0.2b mark, closing at RM212m, comprising 30.7% of container revenue. The VAS mix is also an all-time high, superseding the 29% mix in 4Q21 (a COVID-19 related period), as the group continues to benefit from high storage charges. Even without VAS, we find that pure container yields expanded by 5%/20% qoq/yoy, which is consistent with the second phase of tariff hike of 10% effective 1 Jan 26 (15% hike was eff July 25), and supported by a strong recovery in high-yield gateway volumes.
Highlights
- VAS and container yields positively contributed to Westports’ result beat, two quarters in a row. VAS surged to an all-time high, driven by higher storage charges coinciding with longer CDT, especially for long-lead containers like e-waste cargoes. Excluding these, container yields also expanded quicker than implied due to the new tariff (second phase effective Jan 26). These more than offset rising fuel costs, which materialised in Mar 26 onwards, but appear to have tapered down.
Rising yard congestion in July 26 is manageable, and we now assume gradual normalisation of VAS. Channel checks indicated that yard congestion spiked again in Jul 26 to 90-95% levels, but we believe management has taken measures to make it manageable. We upgrade our earnings/EBITDA forecasts by up to 6% respectively, as we now assume a more gradual pace of VAS normalisation. Maintain HOLD with a higher target price of RM6.50.
Analysis
2Q26 beat our/consensus expectations for the second quarter in a row, with 1H26 comprising 58% of our/consensus forecasts. The positive deviations were, again, higher-than-expected Value-Added Services (VAS) and container yields, similar to 1Q26. For the first time, quarterly VAS breached above the RM0.2b mark, closing at RM212m, comprising 30.7% of container revenue. The VAS mix is also an all-time high, superseding the 29% mix in 4Q21 (a COVID-19 related period), as the group continues to benefit from high storage charges. Even without VAS, we find that pure container yields expanded by 5%/20% qoq/yoy, which is consistent with the second phase of tariff hike of 10% effective 1 Jan 26 (15% hike was eff July 25), and supported by a strong recovery in high-yield gateway volumes.
HOLD (Maintained)
Current price:
Target price:
Upside:
Previous TP :
RM6.69
RM6.50
-2.8%
RM6.10
Analyst
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