Westports Holdings : No significant impact from Hanjin bankruptcy HOLD

STOCK FOCUS OF THE DAY

Westports Holdings : No significant impact from Hanjin bankruptcy          HOLD

The bankruptcy of Hanjin Shipping Co., South Korea's largest and world's eighth by capacity, will not have a significant impact on Westports as its cargo accounts for less than 3% of the port's throughput. Following similar moves in South Korea, Hanjin last Friday filed for bankruptcy protection in the US to protect its vessels from being seized by creditors. It is reported that Hanjin represents nearly 8% of the trans-Pacific trade volume for the US market. As creditors earlier reportedly seized ships and terminal operators refusing to handle its cargoes, Hanjin's collapse would be the largest container-shipping failure, compared with other carrier bankruptcies before this. Hanjin's throughput at Westports comprised mainly gateway traffic. We believe it would not have any significant impact on Westports, which has already been impacted by flat growth in imports and exports. While Westports has gained from ad-hoc calls by shippers, uncertainties remain over the shake-up in shipping alliances, which could result in traffic being shifted to Singapore. Management has said it would have greater clarity by October on how the Ocean Alliance will implement a two-hub strategy in the region.

Meanwhile, Bernama reported that an alliance between six Malaysian and 11 Chinese ports will fuel the development of shipping, logistics and related industries in both countries, as part of China's ”One Belt, One Road." No details were provided, but the Malaysian government is hoping that the six ports can be developed quickly, encompassing the surrounding areas, including the industrial sector and property development. We maintain our numbers for now, pending greater clarity from the implementation of the shipping alliances. Maintain HOLD, with an unchanged fair value of RM4.16/share - implying a 24x PE on FY16F EPS and at a 15% discount to our DCF value of RM4.87/share.

Others :

SapuraKencana Petroleum : ONGC T&I job in the bag     HOLD

QUICK TAKES

Felda Global : To sell AXA Affin?                SELL

Plantation Sector : Newsflow for week of 29 August to 2 September       NEUTRAL

ECONOMIC HIGHLIGHTS

US : Fed rate hike most likely in December

NEWS HIGHLIGHTS

Property Sector : Amcorp Prop rides on strong partnerships

Power Sector : Ranhill tipped for another IPP, a 300 MW power plant in Sabah

Engineering Sector : Bintai Kinden’s subsidiary gets RM169mil S’pore hospital job