Alliance: RM2.84 fair value for Westports
KUALA LUMPUR: Alliance Research has estimated a fair value of RM2.84 for Westports Holdings Bhd in contrast to its initial public offering (IPO) price of RM2.50 based on a dividend discount model valuation.
Westports will be listed on Bursa Malaysia on Oct 18.
"Based on its policy to pay out 75 per cent of net profit, we expect Financial Years (FY) 2013-2015 dividend per share of 9.0 sen, 9.8 sen and 9.9 sen, respectively.
"Based on the IPO price, this translates into a dividend yield of 3.6 per cent, 3.9 per cent and 4.0 per cent for FY13-FY15 respectively," it added.
According to Alliance Research, it expects Westports to benefit from rising containerisation, Southeast Asia's secular growth story, and increasing adoption of larger vessels.
The research house said the container terminal seven (CT7) which is currently under construction by Westports will add 15.8 per cent capacity once completed in 2015.
"It is also expected to result in higher depreciation, amortisation, personnel and finance costs from FY14.
"We expect core revenue to grow at a three-year compound annual growth rate (CAGR) of 5.2 per cent to RM1.43 billion in FY15 due to rising container throughput.
"The forecast is for the group's core net profit to grow at a three-year CAGR of 2.5 per cent to RM449.7 million in FY15 in anticipating growth in container throughput to lag behind the incremental operating cost of CT7," it added.
Westports expects to raise up to RM2.2 billion from its IPO. -- Bernama