The proposed acquisition would help facilitate an increase in CT capacity

By NUR HANANI AZMAN / Pic By MUHD AMIN NAHARUL

WESTPORTS Holdings Bhd’s wholly owned unit, Westports Malaysia Sdn Bhd (WMSB), has entered into a conditional sale and purchase agreement with Pembinaan Redzai Sdn Bhd to acquire 146.4ha of leasehold land in Klang for RM393.96 million cash.

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

“Westports group’s current CT facilities, comprising CT1 to CT9, is operating at a utilisation rate of 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 twenty-foot equivalent units (TEUs) per annum upon its completion,” the port operator stated last week.

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 CT10 to CT17, 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 fundraising exercises. The proposed acquisition is expected to be completed by the fourth quarter of 2020 (4Q20).

The group is expected to achieve significant cost savings and enhance operational efficiency by undertaking the proposed expansion on both the land and the acquired land from the Selangor State Development Corp (PKNS) land, instead of constructing new CTs at a different location, as this will enable the group to share facilities and resources from its existing CTs such as container gates, terminal operating systems and warehouses.

In a separate filing, Westports said its net profit fell 13.8% to RM125.44 million in 4Q19 from RM145.54 million a year ago, due to an asset write-off arising from a vessel incident involving WMSB.

Westports group MD Datuk Ruben Emir Gnanalingam said a berthing container vessel made contact with WMSB’s two ship-to-shore cranes on Nov 8, 2019. As a safety measure, WMSB has partially closed the berths to assess the damages.

“Westports’ 4Q19 profit before tax fell 18% year-on-year to RM158 million due to the asset write-off arising from the vessel incident. The group’s profit after tax declined 14% to RM125 million due to the same reason.

“Westports also achieved another consecutive record-breaking container throughput level in the 4Q by handling 2.82 million TEUs. Transhipment containers were at 1.84 million TEUs whereas gateway boxes, which support domestic economic activities, improved to 0.98 million TEUs,” he said.

For financial year 2019 (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, to be paid on March 3, 2020.

Ruben said Westports is expecting a modest container volume growth in 2020 due to the enlarged throughput base and cautious industry outlook.