Hutchison Port

[winston]

Hutchison Port Holdings Trust: Scary waters, hidden treasure

After we re-iterated our BUY call on HPHT on 1 Jun, the stock has been up 10.9% in less than a week and up 7.0% yesterday alone.

Yet HPHT is still down 26.5% YTD mainly due to three main factors:
1) NDRC reference tariff cut
2) US-China trade tensions and
3) MSCI exclusion.

We see little impact operationally for the first two factors and no change in company fundamentals following the third.

We do recognize that government-related actions remain highly unpredictable and our cost of equity increases to 10.0%.

Our fair value decreases from US$0.43 to US$0.375 as a result.

Despite this, we see significant value at current prices. As at 6 Jun’s close, there is a 22.4% upside to our fair value with an 8.8% FY18F yield.

Source: OCBC

[winston]

Hutchison Port Holdings Trust: Diving like Neymar; don’t overreact

As at 16 Jul’s close of US$0.28, HPHT has dived 30% YTD relative to the STI’s -3% and is down 42% from its 2017 high of US$0.485.

We continue to expect significant volatility as HPHT remains as a proxy to the wax and wane of trade tensions, but believe fears have been overblown (see 7 Jun report for more details) and see significant value in the counter as at 16 Jul’s close.

We expect 2Q18 results to look weak relative to a strong 2Q17, which was boosted by temporary phase-in and phase-out movements, but to post growth relative to 2Q16 levels.

We encourage investors to collect units post the 2Q18 results release on Monday (after market close).

On the other hand, HPHT’s 3Q18 may be boosted as manufacturers and shipping lines seek to beat the tariff implementation in Sept.

Source: OCBC

[winston]

Hutchison Port Holdings Trust: Volatile, but too cheap already

In our last report on Hutchison Port Holdings Trust (HPHT) dated 17 Jul, we expected a relatively weak 2Q18 set of results and encouraged investors to wait before collecting units.

HPHT’s 2Q results were indeed weak and largely within expectations.

Following the lowered DPU guidance by management, we expect share price softness today.

The market treats HPHT as a proxy to trade tensions, and we continue to expect high volatility heading into the US mid-term elections.

Nonetheless, we believe the stock is oversold. We currently place a 70% probability on HPHT’s YICT throughput falling 10% in 2019, an assumption we deem to be sufficiently conservative given that YICT’s outbound cargoes to the US only account for ~30-40% of its total throughput.

After adjustments, our fair value drops from US$0.37 to US$0.36 which is 31% above 23 Jul’s close.

Source: OCBC

[winston]

vested

Choppy seas

Downgrade to HOLD with TP of US$0.28.

Given the Hong Kong operations’ ongoing struggles with profitability and management’s reduced DPU guidance.

We have cut our FY18F and FY19F earnings forecasts for HPHT by 12% and 19%
respectively, as well as reduced our DPU forecast for FY18F and FY19F from 20.6 HK cts to 18 HK cts for each year.

While >8% yield is on offer, which should support share price in the near term, the stock may struggle to re-rate until it addresses concerns over the profitability of its Hong Kong operations.

Source: DBS

https://researchwise.dbsvresearch.com/R ... VyaWRAQA==

[winston]

vested

Hutchison Port Holdings Trust: 3Q earnings preview

We expect Hutchison Port Holdings Trust’s (HPHT) upcoming 3Q results to be relatively weak.

Industry data shows throughput for Kwai Tsing Container Terminals falling 8.1%, 3.9% and 16.6% YoY for Jul, Aug and Sep respectively.

Cumulatively, 3Q18 Kwai Tsing throughput is down 9.6% YoY while 9M18 throughput is down 5.6% YoY.

Meanwhile, industry data for Shenzhen container throughput showed a -3.0%, +2.3%, -6.9% YoY growth for Jul, Aug, and Sep respectively.

Cumulatively, 3Q18 Shenzhen throughput grew -2.6% YoY while 9M18 throughput is flat with -0.5% growth.

We note that soft 3Q results may add to poor sentiment in the near-term.

That said, HPHT is currently trading at a 0.43x forward P/B (Bloomberg consensus) or more than 2 standard deviations below its average since listing in 2011.

Pending further details from the upcoming results release, we maintain BUY with a US$0.36 fair value.

Source: OCBC

[winston]

vested

Hutchison Port Holdings Trust: Better than expected

Hutchison Port Holdings Trust’s (HPHT) 3Q results were above expectations.

3Q18 PATMI dropped 11.4% YoY to HK$239.5m while 9M18 PATMI came up to 92% of our initial full-year forecast.

We previously expected 3Q Hong Kong throughput to be weak, which was the case, with a precipitous 17% drop YoY which management attributed to Typhoon Mangkhut and intense competition.

However, our initial ASP projections were overly bearish on hindsight.

Looking ahead, management has noted an influx of rush orders in early 4Q18, presumably timed to beat the implementation of the US tariffs in early 2019.

Given that the stock remains a proxy to US-China trade tensions, we continue to expect high volatility heading into the US mid-term elections, and with ongoing news flow on the trade situation.

After adjustments, our fair value remains at US$0.36. As at 26 Oct’s close, HPHT is trading at a 10.1% FY18F yield and at 0.42x historical P/B which is more than two standard deviations below 0.75x (its average since listing).

Maintain BUY with a fair value estimate of US$0.36.

(Deborah Ong)

[winston]

vested

JOINT OPERATING ALLIANCE OF THE KWAI TSING CONTAINER TERMINALS WHICH HUTCHISON PORT HOLDINGS TRUST HAS AN INTEREST IN

23 berths across Terminals 1, 2, 4, 5, 6, 7, 8 and 9 (together the “Combined Terminal Facilities”) of Kwai Tsing, New Territories, Hong Kong (the “Hong Kong Seaport Alliance”).

HIT, which owns 12 berths in Terminals 4, 6, 7 and 9 North, is a wholly-owned subsidiary of HPH Trust.

The objective of the Hong Kong Seaport Alliance is to
(i) improve the value proposition of the Combined Terminal Facilities in the context of growing regional competition;
(ii) maximise efficiencies to the benefit of customers and the industry at large;
(iii) optimise utilisation of the Combined Terminal Facilities and cost synergies; and
(iv) reduce the environmental impact of such operations in Hong Kong.

https://links.sgx.com/FileOpen/HPH%20Tr ... eID=539886

[winston]

vested

Hutchison Port Holdings Trust: HK$12.3b non-cash impairment

Hutchison Port Holdings Trust’s (HPHT) FY18 results included a HK$12.3b non-cash impairment (largely a goodwill impairment) which we had not expected.

Otherwise, core PATMI was within expectations. The non-cash impairment reduces NAV per unit by 31% QoQ to HK$3.07 or ~US$0.39, which in turn means HPHT is trading at a historical P/B of 0.66x, using 12 Feb’s closing price.

While this figure is still below the 5-year average of 0.73x, we no longer find HPHT’s price levels attractive given the macro uncertainties.

After adjustments, our fair value drops to US$0.22 and we downgrade to SELL. Revisiting our earlier Buy thesis and current downgrade to SELL.

We note that while operational metrics did remain relatively stable in FY18 and progress has been made with the trade situation, we failed to anticipate:-
1) the large goodwill write-down
2) the low DPU guidance of 11 to 17 HK cents for FY19 and
3) diminishing prospects of an early termination of the voluntary debt program.

We downgrade to SELL with a fair value estimate of US$0.22.

Source: OCBC

[winston]

vested

HPH Trust declares 24% lower 2H DPU of 8.48 HK cents as 4Q sinks into the red on impairment losses

By PC Lee

SINGAPORE (Feb 12): Hutchison Port Holdings Trust (HPHT) reversed into losses attributable to unitholders of HK$12.1 billion ($2.1 billion), or HK138.97 cents, in 4Q18 compared to earnings of HK$0.24 billion in 4Q17.

During the quarter under review, the group had recognised non-cash impairment losses of HK$12.3 billion asset impairment assessment in view of the mounting global trade uncertainties, behavioural changes in multinational corporations caused by the current trade tensions, including accelerating the diversification of production bases outside of China and the effects stemming from the structural changes within the shipping line industry.

Revenue and other income for the 4Q18 quarter came in at nearly HK$3 billion, 5% above last year.

Combined container throughput of Hongkong International Terminals (HIT), Cosco-HIT and ACT (Asia Container Terminals) -- collectively known as HPHT Kwai Tsing -- decreased 2.2%, primarily due to the decrease in Intra-Asia and transshipment cargoes.

The container throughput of Yantian International Container Terminals (YICT) was 10.9% above last year, primarily driven by the increase in US, empty and transshipment cargoes.

The trustee-manager of HPHT said the surge in the US cargoes was driven by the frontloading of cargoes in anticipation of the 25% tariff implementation originally scheduled in January by the US to Chinese exports.

Average revenue per TEU for Hong Kong was above last year, mainly due to lower volume incentives to certain liners. For China, the average revenue per TEU was below last year, due to higher transshipment mix and Renminbi (RMB) depreciation.

Cost of services rendered was HK$1.13 billion, 1.5% above last year due to higher throughput and general cost inflations but partially offset by savings arising from cost control initiatives and RMB depreciation. Staff costs were HK$65.2 million, 7.4% below last year mainly due to lower headcount and RMB depreciation but partially offset by general cost inflations.

The trustee-manager has declared a DPU of 8.48 HK cents for the 2H period from July-Dec 2018, 24% lower compared to the DPU of 11.10 HK cents for the period from July-Dec 2017.

Source: The Edge

https://www.theedgesingapore.com/hph-tr ... 401b309bc7

[winston]

vested

Hutchison Port Holdings Trust (HPHT SP): HOLD
Market Cap: US$2,265m
Average Daily Value: US$1.91m
Last Traded Price: US$0.260; Price Target: US$0.26 (Upside 0.0%) (Prev US$0.38)

by Paul YONG

Uncertainties

FY18 core earnings fell 22% y-o-y to HK$738m mainly due to higher finance costs with full year DPS 17.5% lower at 17HKcts

Non-cash impairment charges of HK$12.3bn to reflect uncertain outlook and other structural changes

We cut our FY19F DPS forecast to 15HKcts, which is within management’s guidance of 11HKcts to 17HKcts

Maintain HOLD with a reduced TP of US$0.26

Source: DBS

https://researchwise.dbsvresearch.com/R ... VyaWRAQA==