Sunday, October 27, 2013

Hutchison Port Holdings Trust: 3Q13 missed expectations (OCBC)

Hutchison Port Holdings Trust:
Fair value US$0.74
add: 12m dividend forecast US$0.05
versus: Current price US$0.77

3Q13 missed expectations
• 3Q13 revenue up 1%; PATMI down 8%
• Cut topline forecasts
• Reduce FV to US$0.74

Hutchison Port Holdings Trust (HPHT) reported 3Q13 results that were lower than ours and the street’s expectations. Revenue climbed 1% YoY to HK$3.36b.
Total operating expenses increased by 1.3% to HK$2.17b. Profit after tax fell 2.2% to HK$966m. Profit attributable to HPHT unitholders fell 8.4% to HK$539m. We lower our forecasts to -1% and 0% YoY change in 2013 throughput for HPHT’s ports in Kwai Tsing, HK and Yantian, Shenzhen respectively. Our previous forecasts were 0% and 2% growth. Our revenue forecast for FY13 thus falls to HK$12.4b from HK$12.6b. Shipping lines' formation of alliances, e.g. P3, G6 and CKYH, should continue to put pressure on transshipment volumes, especially in HK. We trim our FV for HPHT to US$0.74 from US$0.84 and downgrade HPHT from Buy to HOLD on valuation grounds. HPHT is currently trading at a FY13F dividend yield of 6.8%.

HK volume flat YoY
Hutchison Port Holdings Trust (HPHT) reported 3Q13 results that were lower than ours and the street’s expectations. Revenue climbed 1% YoY to HK$3.36b. Total operating expenses increased by 1.3% to HK$2.17b. Profit before tax fell 1.6% to HK$1.07b and profit after tax fell 2.2% to HK$966m. Profit attributable to HPHT unitholders fell 8.4% to HK$539m. According to management, for 3Q13, volume through the HPHT's HK ports was roughly flat YoY (the prior effect of striking workers has worn off) and the 9M13 volume is down 4%. Volume through Yantain (Shenzhen) was down 3-3.5% QoQ, making 9M13 volume for Yantian flat. All-in-all, the US trade is flat YoY and European volumes remains disappointing, down roughly 5%. Fully-laden export cargo for both US and Europe had registered single-digit growth in 3Q13, but empty boxes were down quite a lot YoY, affecting overall volume.

Trimming 2013 topline forecast
We lower our forecasts to -1% and 0% YoY change in 2013 throughput for HPHT’s ports in Kwai Tsing, HK (including the increase in TEU from the acquisition of Asia Container Terminals in Mar) and Yantian, Shenzhen respectively. Our previous forecasts were 0% and 2% growth. Our revenue forecast for FY13 thus falls to HK$12.4b from HK$12.6b. Shipping lines' formation of alliances, e.g. P3, G6 and CKYH, should continue to put pressure on transshipment volumes, especially in HK.

FY13F dividend yield of 6.8%
Management is guiding FY13 DPU of approximately 40 HK cents, versus a previous range of 40-44 HK cents. With the adjustment of our topline and cost assumptions, we trim our FY13 dividend from 44.2 HK cents to 40.6 HK cents. HPHT is trading at a FY13F dividend yield of 6.8%. For FY14, tax rate should increase significantly because of the expiry of tax holidays for some phases of Yantian, and there will be the full year impact of the 9.8% wage increase for port workers agreed on in early May.

Downgrade to HOLD
We trim our FV for HPHT to US$0.74 from US$0.84 and downgrade HPHT from Buy to HOLD on valuation grounds.



Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 22/10/13

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