Westports shares fall towards IPO price as vessel-sharing alliance looms


KUALA LUMPUR, Oct 23 (Reuters) - Shares in WestportsHoldings Bhd, Malaysia's busiest port operator, felltowards to their IPO price of 2.50 ringgit after a strong debutlast week, on concerns of less port calls and weaker earnings ifa mega shipping container alliance materialises.

The P3 alliance, announced in June, brings together the topthree shippers, CMA CGM Group, A.P Moller Maersk's Maersk Line and Mediterranean Shipping Co, to share vessels andcut costs in the face of weaker container freight rates.

The P3 alliance posted up preliminary schedules late lastweek that shows a reduction in the number of calls made to PortKlang, where Westports is one of two main port operators andaccounts for 69 percent of container traffic.

Westports shares fell for a second day on Wednesday, closing1.17 percent lower at 2.53 ringgit ($0.80), as investors grewconcerned over weaker earnings if European Unionanti-competition authorities green light the P3 alliance nextyear.

"We believe the market is not fully discounting thepotential earnings impact of P3 and as we view the sharesexpensive," said Barclays Research in a note to clients,initiating an underweight call and a target price of 2.20ringgit.

Westports told the stock exchange later on Wednesday thatPort Klang would now among the ports of call for 6 services outof the 26 being proposed by the P3 alliance for Asia-Europe andMediterranean trade lanes.

That represents a drop from 10 services out of the 30 run bythe three shippers currently, although Westports said thealliance will not affect future earnings.

"To date, we have not been informed by our customers of anymaterial changes to their hubbing strategy or throughput volumesand further, the P3 service routing only represents a portion oftheir volumes to Westports, the firm said.

"We believe that our growth prospects remain intact,supported by growing global trade ...and our own initiatives toachieve operational efficiencies," it added.

Last week, Westports shares rose as much as 8.4 percent to2.71 ringgit per share on its debut as institutional funds andretail investors left out during the pre-IPO process chased asmall flotation. ($1 = 3.1725 Malaysian ringgit) (Reporting By Yantoultra Ngui; Editing by Niluksi Koswanage)

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