Hutchison Port

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Hutchison Port Holdings Trust: Unit prices now more reasonable

Hutchison Port Holdings Trust’s (HPHT) 3Q17 results were within expectations.

NPAT attributable to unitholders dropped 37.1% YoY to HK$270.4m or 23.5% of our full-year forecast.

While throughput growth for HPHT’s HK ports and YICT were +13% and +14% YoY respectively in 3Q17, ASP declines resulted in a flat revenue.

The management still keeps to its FY17 DPU guidance of 20 to 23 HK cents, and am more comfortable with the lower end of that range.

This translates to 5.9% to 6.8% dividend yield against yesterday’s closing price of US$0.435.

Looking forward to FY18F, the management expects a much milder decline in ASP and low single-digit throughput growth in Kwai Tsing and YICT.

As we roll our estimates forward, our fair value remains at US$0.42.

Source: OCBC

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HK operations disappoint

Maintain HOLD with reduced TP of US$0.39 as we cut our DPU forecast to HK 20cts for FY17F and FY18F.

We see HPHT as fairly valued given its current prospective yield of 5.8% as the group is guiding for FY17F DPU to be at the lower range of the HK20-22cts range following weak 3Q results.

We expect DPU for FY18F to stay flat from FY17F as group profitability remains under pressure, with ROEs projected to be at just 3%.

Valuation:

Maintain HOLD with TP of US$0.39. Our TP is based on a discounted cash flow valuation framework (weighted average cost of capital of 7.4% and terminal growth rate of 0%).

After cutting FY17F DPU forecast to HK 20cts, we see the prospective yield of 5.8% as being fairly valued.

Source: DBS

https://researchwise.dbsvresearch.com/R ... E=dbgadk-b

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OCBC: Start scooping Hutchison Port Trust at US0.39 and below

Source: The Edge

https://www.theedgesingapore.com/start- ... 0-87358173

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Hong Kong goes Blade Runner with concept of homes ‘floating’ above container port terminals

Hongkong International Terminals says maverick proposal to turn airspace above functioning container terminals into housing is ‘technically feasible’

Another idea is relocating Kwai Tsing container terminal to make way for housing.

Hong Kong’s port is the fifth biggest in the world, with Kwai Tsing container terminal handling up to 80 per cent of its container throughput of about 20 million units a year.

The port, along with parcels of neighbouring land sites housing backup facilities, account for 380 hectares, equivalent to nearly 380 soccer pitches.

Source: SCMP

http://www.scmp.com/property/hong-kong- ... ting-above

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Hutchison Port Holdings Trust: Better than the headlines

Hutchison Port Holdings Trust’s (HPHT) results were within expectations, with FY17 DPU coming to 98.1% of our full-year forecast.

As announced on 1 Feb 2018, the National Development and Reform Commission (NDRC) has reduced the “list price” or reference tariff rate for origin and destination foreign trade containers at Shenzhen – Yantian ports from RMB 1400/TEU to RMB 980/TEU.

While we believe the recent regulatory measures has tangible implications for the industry, we see the impact on HPHT as a whole as being significantly muted than what headlines would suggest.

Based on our analysis, HPHT’s unit price reaction on 2 Feb has been too severe. Note that though YICT contributes ~64% to HPHT’s top-line, it contributes less to the bottom line as a 50+% owned subsidiary of HPHT.

Furthermore, we estimate that YICT’s ASP is already ~50% below the new “list price” tariff, which should allow the port operator some buffer in negotiations going forward.

Source: OCBC

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Hutchison Port Holdings Trust: Trade spat affects <2% of throughput

Goods targeted in the proposed tariffs make up around 2% of Hutchison Port Holding Trust’s (HPHT) YICT throughput and 1% of its Kwai Tsing’s throughput, based on analysis done by HPHT’s management of the product types they handle.

Even if all of the throughput related to these goods were to cease completely as a result of the tariffs (which may or may not be implemented), a scenario which we consider unlikely in itself, we estimate that the impact on HPHT will be less than 2%.

Furthermore, we believe yesterday’s 1Q18 results indicate that the fears surrounding NDRC 30% tariff cut have been overblown – revenue/TEU for YICT fell only 1% YoY in 1Q18, which in turn was mainly a result of continued impact from shipping line M&A and a change in throughput mix, countered by RMB strength.

After adjustments, our fair value remains at US$0.43, which represents an upside of 30.3% against 13 Apr’s close of US$0.33. HPHT is trading at a 8.1% FY18F yield as of 13 Apr’s close.

Source: OCBC

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Hutchison Port Holdings Trust's 1Q earnings fall 12.9% to $24.3 mil

By Michelle Zhu

SINGAPORE (Apr 13): The trustee-manager of Hutchison Port Holdings Trust (HPHT) reported earnings for 1Q ended Feb fell 12.9% to HK$145.4 million ($24.3 million), or 1.67 HK cents per unit, from HK$166.9 million on higher depreciation, costs and interest expenses.

Revenue and other income grew 3.5% to HK$2.7 billion from HK$2.6 billion a year ago, due to higher combined container throughput on the increase in transshipment cargoes.

This was largely led by higher container throughput of YICT, driven by growth in empty and transshipment cargoes.

However, average revenue per twenty-foot equivalent unit (TEU) for Hong Kong and China were below last year, due to certain revisions to tariffs following the mergers and acquisitions (M&A) of some liners in 2H17.

In addition, China’s average revenue per TEU was also adversely impacted by unfavourable transshipment mix, but partially offset by RMB appreciation.

Cost of services grew 8% to HK$992.2 million from HK$918.5 million a year ago due to higher throughput handled, general cost inflations, including higher external contractors’ costs and fuel price and RMB appreciation.

Staff costs grew 2.8% to HK$77.1 million compared to a year ago.

Share of losses after tax of associated companies widened by 16.1% to HK$33.9 million due to higher depreciation and interest expenses of Huizhou International Container Terminals (HICT) as it became fully operational after its completion of construction in Oct 2017.

Share of profits after tax of joint ventures was HK$8.5 million, down by 50% from a year ago on the back of weaker combined results of COSCO-HIT and ACT – a result from lower revenue per TEU, which was largely attributed to certain revisions to tariffs following the M&A of some liners in 2H17.

In its outlook, HPHT’s trustee-manager highlights 2018 as a particularly transformative year for the global shipping lines industry, driven by shifting economic trends and trade flows in conjunction with the consolidation of ownership.

The trustee-manager says it remains cautiously optimistic, and will continue to build on the trust’s strengths while adhering to strict financial discipline.

“With a strategic transshipment hub in Hong Kong, the exemplary mega-vessel handling capabilities of YICT and our strategic investment in state-of-the-art equipment and facilities, HPHT is well positioned to support the changing requirement of the container shipping industry and maintain its reputation as the preferred gateways to the vast Pearl River hinterland,” it adds.

Units in HPHT closed 1.5% lower at 33 US cents on Friday.

Source: The Edge

https://www.theedgesingapore.com/hutchi ... 8-91832885

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What’s New

1Q18 earnings disappoint as HK operations lag
We project FY18F dividend to be flat from FY17
HPHT is now the highest yielding large cap stock in Singapore
Upgrade to BUY, TP US$0.38

Upgrade to BUY with TP of US$0.38. With Hutchison Port Holdings Trust (HPHT)’s share price declining by over 10% since it reported its FY17 results, we believe value has emerged at the
current price level, implying a dividend yield of 8%.

While earnings remain unexciting given on-going price pressures, HPHT’s operations are generating sufficient cash flows to support a generous dividend payout.

Key Risks to Our View:
A global recession would materially impact trade and throughput numbers for HPHT, which would then have an impact on the group’s earnings and cash flows, and ultimately dividend payout.

Source: DBS

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

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<Research Report>G Sachs: HPH Trust 1Q Results Miss

HPH Trust announced that for the first quarter ended 31 march 2018, net profit attributable to unit holders of HPH Trust declined 12.9% yearly to over $145 million.

Goldman Sachs said in its report that the first quarter net profit of the company equivalent to 17% of the full-year profit forecast of Goldman Sachs was below estimates, mainly due to:-
1. weak shipment of its Hong Kong business
2. continuous declining average freight and
3. heightened interest expenses
offsetting increased shipment in Yantian, Shenzhen and RMB appreciation.

Source: AAStocks Financial News

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Vested

On the back of the MSCI rebalancing yesterday, Hutchison Port Holdings Trust (HPHT) fell 7% to US$0.275 with over 550m units traded (versus its 1y daily average of 20.8m units).

We do note that HPHT is seen as a proxy to the trade situation as US-China tensions wax and wane, and expect volatility over the medium-term.

Nonetheless, we believe that the current price point presents an important buying opportunity for investors. We estimate that the impact of the proposed US tariffs on US$50b worth of Chinese goods, if implemented, will have a <2% impact on HPHT’s throughput.

The business trust looks cheap not only relative to our own fair value. Yesterday’s close of US$0.275 looks attractive against Bloomberg target price consensus of US$0.35 and is notably below the lowest sell-side target price of US$0.29.

HPHT is trading at a 9.7% FY18F yield and a 10.2% FY19F yield. We re-iterate BUY with a fair value of US$0.43.

Source: OCBC