Malaysia’s biggest port considers new investors for $11 billion expansion

The company is also looking at a dividend reinvestment plan and borrowing to help fund the expansion of the facility in Klang.


File photo of a port and cargo ships. PHOTO: UNSPLASH

February 14, 2024

KUALA LUMPUR – Malaysia’s biggest port operator, Westports Holdings, is considering external strategic investors to help fund a RM39.6 billion (S$11.1 billion) expansion that will see capacity nearly double in coming decades.

“We would be open to it, if it’s someone who can come and add value to us,” executive chairman Ruben Emir Gnanalingam said.

“We have not ruled anything out.”

The company is also looking at a dividend reinvestment plan and borrowing to help fund the expansion of the facility in Klang, he said in an interview at the site.

The port is the second-biggest in South-east Asia and its plan will see capacity increase to 27 million 20-foot equivalent units – from 14 million currently – over the course of its concession, which runs until 2082.

Westports’ expansion, which kicks off with the first of eight new container terminals becoming operational in 2027, echoes similarly ambitious plans from neighbours across the Malacca Strait, one of the world’s busiest sea routes.

Singapore is building what will be the world’s largest automated terminal when its Tuas Port is completed in 2040 at an expected cost of $20 billion.

Meanwhile, with traffic volumes forecast to exceed the strait’s capacity by 2030, Thailand has proposed bypassing the shipping lane entirely.

It has put forward a plan to build a US$28 billion (S$37.7 billion), 100km “Landbridge” that will link two seaports and cut travel time by four days.

On that front, Mr Ruben said he is not worried by the idea at the moment because his customers are yet to seriously consider the project as an alternative.

The company’s shares have surged more than 20 per cent since their recent low in October, beating the roughly 5 per cent gain in the Kuala Lumpur benchmark.

Two-thirds of analysts who cover the firm have a “buy” recommendation.

Westports is looking at opportunities to buy other ports in South-east Asia, but will not overpay for an asset, according to Mr Ruben, who succeeded his late father Gnanalingam Gunanath Lingam as chairman in 2023.

“There have been ports we have bid for, but we have a limit of how high you can go,” he said.

“Our goal is to make decent returns on investment. Our goal is not to plant flags and lose money.”

Sustainability is another major focus. The global maritime industry is under growing scrutiny as its greenhouse gas emissions have increased 20 per cent in the past decade, and it now accounts for about 3 per cent of the world’s total.

Shipping firms are accelerating efforts to go green, overhauling fleets to meet an industry target for net-zero emissions by 2050.

Westports’ efforts to reduce its carbon footprint have seen mixed results, and the firm is now rethinking its use of electric vehicles (EVs) – a mainstay of many companies’ efforts to reduce their emissions.

“The crazy thing is, the EV trucks we tried produced more emissions than diesel under certain conditions, because our grid is so dirty due to coal,” Mr Ruben said.

“So we have decided to slow down on EV use.” BLOOMBERG

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