Divestment may work well for us: Westports
[PETALING JAYA] Westports Holdings Bhd is not surprised by the rumour that Khazanah Nasional Bhd may divest its entire 4.74 per cent stake in the port operator, and is taking the news positively as an avenue to increase its free float, said chief executive officer Ruben Emir Gnanalingam.
Malaysia's The Star daily reported on Monday, quoting a source, that Khazanah was looking to cash out with quite a handsome gain from Westports and intended to place out its shares to other funds.
Mr Ruben, however, was not able to confirm this, as Khazanah had not communicated the matter as at Monday.
"Khazanah has not told us anything yet, but the move, if true, wouldn't be surprising because it has a plan to reduce its stakes in private entities which are considered to be on its non-core strategic portfolio list. It may work well for us, as we are trying to increase our free float," he told the Malaysian daily on Monday.
This is because, according to Mr Ruben, there have been many parties asking for the port operator to increase its placements. It is still unclear whether Khazanah will reduce or divest its entire stake in Westports, and to which fund it would sell via a book-building exercise, The Star said.
Khazanah is the third largest shareholder in Westports, with a 4.74 per cent stake held indirectly via Lankayan Ventures Sdn Bhd. When Westports listed in October last year, Lankayan Ventures sold down its stake from 7.52 per cent to 4.74 per cent.
Although the transacted price was not made public, this reflected that Khazanah had already cashed out some gains a year ago.
Besides the Gnanalingam family, other notable funds in Westports include AIA Bhd, Hwang Investment Management Bhd and Genesis Group.
Other big-name government-linked funds in Westports are Kumpulan Wang Persaraan, the Employees Provident Fund, Skim Amanah Bumiputera, Lembaga Tabung Haji and Permodalan Nasional Bhd.
Westports' largest shareholders are Pembinaan Redzai Sdn Bhd with a 42.39 per cent stake and South Port Invest Holdings Ltd with 23.55 per cent.
Pembinaan Redzai is majority held by G Gnanalingam, while South Port is a unit of Hong Kong tycoon Li Ka-shing's ports-to-telecoms conglomerate Hutchison Whampoa.
Other substantial shareholders include Semakin Ajaib Sdn Bhd, which includes Mr Gnanalingam's wife, Siew Yong, and his son Ruben.
Hypothetically, the sale of the entire stake at the current price of approximately RM2.89, up 16 per cent since Westports' initial public offering, could reward Khazanah with approximately RM64.5 million (S$25.5 million).
Nevertheless, some quarters are of the opinion that Khazanah should not sell out, as Westports is still an attractive yield-play counter with a 4 per cent dividend yield.
Westports' near-term catalyst, besides its volume growth, should be the impending tariff hike.
On growth this year, Mr Ruben expects the port's 20-foot equivalent units (TEUs) to increase between 8 per cent and 13 per cent.
"I am confident that the port can handle over eight million TEUs in 2014," he said, adding that so far this year, Westports' volume had increased 12 per cent over the equivalent period last year.
Westports' net profit for the second quarter ended June 30 rose to RM122.5 million from RM119.6 million a year ago, buoyed by an increase in container throughput at its terminal located on Pulau Indah, Port Klang.
The capacity expansion of Container Terminal 7 is well-positioned to capitalise on the rising container throughput, as it expects the strong momentum to persist for the remainder of the year. Now, the port is firming up its expansion of Container Terminal 8 by the last quarter of the year.
