Tuesday, July 16, 2013

HPH Trust : Soft volume seems already priced in (DB)

HPH Trust :
Price at 11 Jul 2013 (USD) 0.76
Price target - 12mth (USD) 0.83
Soft volume seems already priced in

Sequential recovery remains intact and yield still looks attractive
We cut our earnings estimates as HPHT’s volume YTD turned out lower than we expected. However, on the back of the acceleration of G3 growth and the strong recovery of the US housing sector, we expect China’s exports to improve 2H onward. 2013E DPU of HKD40 cents still gives a yield close to 7%, which remains attractive, in our view. Maintain Buy.

We cut earnings estimates as throughput YTD missed
HIT throughput dropped by 20% over April-May as impact from the strike filtered through. While Yantian was off to a strong start this year, the higher base factor and significant slowdown of shipments going to the US dragged its growth into red territory in April-May. Management has also toned down its guidance to flat YoY volume growth in 2013 (vs. 5% growth previously). We have cut our 2013-14E earnings by 16% and 17%, respectively, assuming lower volume growth.

We stay positive as China’s export recovery remains intact
The acceleration in G3’s growth ahead should lift China’s exports 2H13 onward. The US housing recovery bodes particularly well for container volume since furniture is the largest containerized cargo. As mega-sized ships offer huge cost advantages, we foresee that there will be a round of ordering of these mega-sized ships, which would greatly benefit HPHT.

2013E yield of c.7% still attractive; key risks
Along with our earnings cut, we have reduced our 2013E DPU to HKD40 cents. However, as the stock dropped in the last few months, the dividend still offers 6.8% yield for 2013E, which in our view is attractive. We have reduced our target price to USD0.83 from USD0.92. Key risk is volume coming weaker than we expected.

Source/Extract/Excerpts/来源/转贴/摘录: Deutsche Ba
Publish date:12/07/13

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