by tonylim » Sat Mar 19, 2011 10:56 am
Do read page 64 of the IPO prospectus as follows:-
It highlights that port operation license is renewal every 3 years
and is not guaranteed "
The ports industry in the PRC is a highly regulated industry.
The PRC port industry is highly regulated. Operators are required to obtain a port operation licence, which has to be renewed every three years (which requires certain requirements to be fulfilled), as well as to comply with strict regulations in respect of, among other things, operational management, supervision, inspection and the loading, unloading and storage of hazardous goods.
Although the Trustee-Manager does not expect to have any difficulties in obtaining or renewing the port operation licences, there is no assurance that future applications to obtain or to renew the licence will always be approved.
Any failure by HPH Trust to obtain or renew its port operation licence would have a material adverse effect on its financial condition, cash flows and results of operations.
In addition, as a result of terrorist activities and increased security concerns, there is a global move towards increased inspection procedures and tighter import/export controls and safety regulations.
If the compliance costs of any new regulations or procedures cannot be recovered through higher ports fees and charges, the operating margins of HPH Trust may be adversely affected."
"RISKS RELATING TO THE PORT INDUSTRY
HPH Trust’s inability to maintain and renew concession agreements or government approvals may adversely affect HPH Trust.
Substantially all terminal operations in the container terminal industry are conducted pursuant to long-term operating concessions or leases entered into between a terminal operator and the owner of the land on which the port is situated, typically a government entity.
Concession agreements often contain clauses that allow the owner of the land on which the port is situated to cancel the agreement or impose penalties if specified obligations are not fulfilled.
Similarly, because many of the counterparts to concession agreements are government entities, HPH Trust is subject to the risk that concession agreements may be cancelled because of political, social or economic instability or conditions.
Ports are often viewed by governments as critical national assets and sentiment changes may affect port concessions. There can be no assurance that one or more of the existing concession agreements will not be prematurely cancelled or that HPH Trust will not be penalised, with or without cause, by the applicable counterparty.
In advance of the expiration of a concession agreement, the owner of the land on which the port is situated will typically agree to renew the concession with the existing concessionaire, but often only after significant renegotiation that usually involves, among other things, a commitment on the part of the concessionaire to make a capital expenditure with respect to the relevant operation.
There can be no assurance that the concession agreements will be renewed upon their expiration on commercially reasonable terms, if at all, or that HPH Trust would be the winning bidder in any re-tender of one or more of the existing concessions should the relevant port owner elect not to renew the relevant concession with HPH Trust.
In the PRC, terminal operations in the container terminal industry are conducted pursuant to approval from the PRC Government (as defined herein). YICT, YICTP3 and SYWPT operate Yantian based upon the port operation permits issued by the port authority and approvals from the National Development and Reform Commission and the Ministry of Commerce.
The Port Law of the PRC and other relevant regulations authorise the port authority to impose penalties or even revoke the port operation permits if an enterprise engaging in port operation violates certain specified obligations.
HPH Trust is subject to the risk that the port operation approvals may be cancelled or changed by the PRC Government due to political, social, military, economic instability or conditions.
The operation terms of YICT, YICTP3 and SYWPT have been specified in their current business licences. Any extension of such operation terms will be subject to the approval of the PRC Government. There can be no assurance that the operation terms of YICT, YICTP3 and SYWPT will be automatic"
查颜观色,静观其变,审时度世.
.So the future is not that bleak.
