Port operator Westports Holdings of Malaysia is eyeing a merger and acquisition (M&A) deal in the Association of Southeast Asian (ASEAN) region, noting that it continues to pose a big growth potential.
Chief executive officer Ruben Emir Gnanalingam told StarBiz he was keen on pursuing a deal but had yet to find a terminal in the region to join the group.
“South-East Asia is the strongest market for us, as the countries here are still bullish on the economic outlook. Asean potential is amazing in the next 20 to 30 years. This is where the growth will be,” he told the media outlet.
For Westports, intra-Asia trade lanes commanded nearly half of its throughput last year, far above the key shipping Asia-Europe trade lane that contributed about 23% to its volume in 2014.
Previously, Westports had reportedly expressed interest in exploring M&As in India, Indonesia, and Myanmar.
It is one of two terminals alongside Northport at Port Klang, the world’s 12th largest port by volume.
Westports posted a net profit of RM139.8 million (US$39 million) in its fourth quarter ended December 31, 2014, up 6.6% year-on-year. It also set a record net profit of RM512.2 million for the whole of last year, higher by 17.7% from RM435.3 million in 2013.
The port operator also recorded an 8% increase in operational revenue to RM385.9 million from RM357.3 million for the quarter under review, while container throughput increased 11.7% to 2.19 million twenty-foot equivalent units (TEUs) from 1.96 million TEUs.
Forecast for Malaysian ports
Meanwhile, ports in Malaysia are seen to gain support in 2015 for their activity levels from the continuing, although slower, economic expansion and trade growth of the country, according to a new update from Business Monitor International (BMI).
Moreover, Port Klang and Port Tanjung Pelepas will further benefit from expansion projects and developments which have been completed over the last two years.
Total cargo volume handled at Port Klang is seen to rise by 1.4% to 202.33 million tonnes in 2015, while volume at the port of Tanjung Pelepas will rise by 3.7% to 131.02 million tonnes.
The 2015 box traffic at Port Klang is projected to rise by 7.3% to reach 11.87 million twenty-foot equivalent units (TEUs), while at the port of Tanjung Pelepas a gain of 4.6% to 8.97 million TEUs is expected.
BMI is predicting a slowdown in Malaysian economic growth in 2015, with GDP rising by 4.2%, compared to an estimated 5.8% in 2014. The slowdown reflects weaker domestic consumption and export demand.
The expected introduction of a 6% goods and services tax (GST) in Malaysia in April 2015, along with a likely reduction in fuel subsidies and higher electricity tariffs as the government seeks to control the fiscal deficit, will combine to limit household spending.
Meanwhile, the slowdown in China, one of Malaysia’s key trading partners, will restrain export demand. China is Malaysia’s third largest export destination, accounting for 12% of total exports.
“We believe that the recovery in the US will be unable to fully offset the drag from the decline in Chinese demand, resulting in slower export growth in 2015. Over the medium term (2015-2019), we expect Malaysian economic growth to average at 4.1% y-o-y,” said BMI.
The Ministry of International Trade and Industry of Malaysia acknowledged earlier this year that it expects 2015 to be a “challenging” year as the country faces falling oil prices, fiscal deficit, and the imposition of the GST, among others.
Photo courtesy of Westports
