Kuala lumpur: RHB Investment Bank Bhd (RHB IB) maintained a 'neutral' call on the transportation sector, with the ongoing West Asia conflict expected to have a limited impact on Westports Holdings Bhd, while logistics companies could benefit from higher freight rates.

According to BERNAMA News Agency, RHB IB stated that as Westports is a container port operator, conventional cargo only represents 6.2 percent of its financial year 2025 (FY2025) operational revenue. The bank's sensitivity test revealed that a 10 percent increase in fuel costs could reduce Westports' FY2026 earnings forecast by one percent.

The bank noted that if cargo flows are rerouted or consolidated through alternative Asian hubs following the closure of the Strait of Hormuz, transhipment volumes could potentially increase, mitigating the impact on Westports. They expressed confidence that Westports' earnings growth remains intact, driven by sequential tariff increases and a projected container growth of 4.5 percent.

In terms of logistics, RHB IB pointed out that fuel cost increases are usually passed on to end-customers via fuel surcharges. Observations indicated that freight rates remained stable across most routes last week, with exceptions being the Shanghai-New York and Shanghai-Los Angeles routes.

Furthermore, both logistics companies under RHB IB's coverage reportedly have limited direct exposure to the Middle East, with shipment volumes to the region accounting for less than two percent of their total volumes.