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The Strengths In Westports Holdings Bhd’s Business

Westports Holdings Bhd (KLSE: 5246.KL) is a company listed on Malaysia’s stock exchange, Bursa Malaysia. It primarily manages port operations dealing with container and conventional cargo. The company also provides a wide range of port services such as marine services, rental services, and other ancillary services.

In a previous article, I gave a short introduction of Westports’ business. In this article, I want to discuss two strengths that I see with the company.

Location, location, location

The first strength I identified with Westports is its strategic location. The company is located in Port Klang, approximately 12 nautical miles from the Straits of Malacca shipping trade line, with a sailing time of approximately 1 hour to the pilot station.

According to the company, the Straits of Malacca is the second busiest waterway in the world after the English Channel. Each year, over 50,000 vessels sail through the Straits of Malacca, which serves as the shortest trading route between countries in the African continent, European,  Middle Eastern, and Indian subcontinent, to Far East Countries such as China, South Korea, Japan, Taiwan, and those in South East Asian.

As the largest operator in Port Klang, Westports is strategically positioned to serve as a transhipment port and gateway port into a hinterland with an estimated population of 10 million. Moreover, the company has a long-term concession from Malaysia’s government to operate the port until 2054.

The leaders and owners

The second strength I see is the quality of Westports’ management team, and its shareholder structure.

Westports is currently led by CEO Rubhen Emir Gnanalingam, who is the son of the chairman (and also founder) Tan Sri Datuk Gnanalingam. Both have been with the company and the industry for long periods of time, and are supported by a long-tenured management team (the team’s average years of service at Westports is 14).

Furthermore, Westports’ board is represented by directors from Hutchison Port Holdings Limited, one of the major port operators in the world. Having personnel from Hutchison Port on its board would allow Westports to gain access to the former’s commercial, technical, and operational expertise in managing ports.

Collectively, the family of the elder Gnanalingam and Hutchison Port controlled 69.03% of Westports’ shares as of 28 February 2017. Such an owner-operator structure means that the interests of Westports’ major shareholders are likely to be aligned with minority shareholders.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.