The Star Online: Business
The Star Online: Business |
| Posted: Port operator aims to pay 75% of profit as dividend THE much-anticipated listing of heavywweight port operator, Westports Holdings Bhd is finally on track with its bankers having been appointed and its draft prospectus issued. As expected, the cash-flow generating concessionairre will be a yield play as Westports said it targets a dividend payout ratio of not less than 75% of its net profit. Westports recorded a net profit of RM359.3mil on the back of RM1.5bil revenue last year. Westports IPO will only entail an offer for sale that will see existing shareholders hive off 813.2 million shares sold, representing 23.8% of the company stake. Of this, Tan Sri G Gnanalingam and family will be disposing a total of 450 million shares or 13.2% of Westports. 710.9 million are being offered to institutional investors while 102.3 million shares will be the retail portion. As the IPO does not include any fund raising for the company, Westports says the listing is mainly to enhance its profile to market its services and establish liquidity for its shares. "It is also to provide an opportunity for the investing community including eligible employees, directors and persons who have contributed to the success to the group to participate in the continuing growth of Westports," it says in the draft prospectus. However, industry sources said that that one of the parties pushing for the listing of Westports is Khazanah Nasional Bhd that holds 8.5% in the company. "With a listing, Khazanah gets a market valuation of its private company portfolio," says one banker. As of Dec 31, 2012, Westports had unused funds of almost RM2.3bil, comprising of RM304.9mil of cash and cash equivalents, a revolving credit facility of RM90mil and senior medium-term notes programmes RM1.9bil. Westports has a total borrowings of RM695mil that translates into gearing ratio of 0.25 times as of end of last year. The largest upcoming IPO so far is AirAsia X Bhd, the low-cost, long-haul affiliate of the AirAsia group, slated to listed in July 10, that may raise up to RM1.3bil from its IPO based on the initial retail price of RM1.45 a share. For Westports' listing, Maybank Investment Bank is the principal adviser while Goldman Sachs and Credit Suisse are both joint global coordinators. RHB Bank, HSBC and Bank of America Meryll Lynch are all joint book runners. Bankers anticipated Westports IPO to garner a fair share of interest, due to it being an infrastructure asset with a concession. According to an analyst, the attraction of Westport is its good track record as well as prospects for further growth. "Westports may match or possibly do better than its counterpart, NCB Holdings Bhd's in terms of its dividend trend," he says. NCB also enjoys EBITDA margins of more than 30%. It isn't clear what Westports' margins are but analysts reckon it could be as attractive as NCB's. NCB is the parent company of Northport (M) Bhd which is the other major cargo terminal in Port Klang. Maybank Investment Bank (IB) in a March report on NCB noted that Westports outshines Northport in throughput growth. "In our view, Westport is a more aggressive port player than Northport, with a robust five-year container throughput compound annual growth rate of 10% compared Northport's 2%. "We think Westport's stronger growth is due to its focus on the fast-growing transhipment rather than indigenous trade," the report said. Additionally, Maybank IB said in that report that Westports' ample landbank is suitable for big shipping lines who want to build a goods consolidation hub in Asean and that Westports' container throughput market share at Port Klang had increased over the years to 69% in 2012 from 45% in 2002. On growth prospects, the draft prospectus says that Westports will continue to capitalise on growing container traffic plying through the Straits of Malacca. "Our handling capacity is to increase to 11 million TEUs (twenty-foot equivalent units) by 2015 from the current 9.5 million TEUs. "We believe this increase in handling capacity will further enhance our competitive edge against other regional ports and we will be able to benefit from the fast growing demand for container handling services in the region," it says.  Click on image for larger view Westports is one of two main container ports in Port Klang alongside Northport. Port Klang is the world's 12th busiest port and it is one of the main ports along the Straits of Malacca, which links Asia with the Middle East and Europe that sees 40% of global trade passing through the waterway annually. On the growth of Westports, its container terminal 6 (CT6) is already completed and boosts the port's total capacity to nine million TEUs. Westports handled 6.9 million TEUs last year, up from 6.4 million TEUs in 2011. It targeted to record 7.5 million TEUs this year and the port's expansion plans actually spanned up to CT9 that should be ready next year. In February 2012, it was reported that Westports planned to invest RM3.18bil for expansion. |
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