Kim Eng on 25 Oct 2012
3Q/9M2012 results largely in line. Hutchison Port Holdings Trust (HPHT) reported 9M2012 EBITDA of HKD5.26b, that made up 73% of our FY2012 EBITDA estimates, results of which were distorted slightly by FX losses which had a total impact of ~HKD80m. Adjusting for this impact, HPHT’s 3Q2012 core EBITDA of HKD1.92b declined only marginally by 1% YoY, and was largely in line with ours and consensus expectations.
9M2012 throughput +6% YoY, but on Transhipment cargo. HPHT recorded throughput growth of 6% YoY for 9M2012. For 3Q2012, HIT throughput increased 5.6% YoY, while YICT throughput increased 9.7% YoY. However both HIT and YICT’s higher throughput were primarily due to the growth in Transhipment cargo, and that correspondingly affected core EBITDA margins by ~2 percentage points. We believe this effect should be mitigated when the global economy picks up, with more higher-margin O&D cargo handled.
2H2012 DPU likely in the bag. Management guided that Development Capex deferrals would keep FY2012 Capex to ~HKD700m (vs FY2012 projection of ~HKD1.2b), allowing them flexibility to maintain the FY2012 projected DPU of HKD51.2cts, barring an economic catastrophe in 4Q2012. However, they could not commit to maintaining current DPU levels for FY2013 in light of current economic uncertainties, and also stated that deferred capex would eventually have to be spent. We believe our forecasts have adequately captured such a possible reduction in DPU (-5% YoY) for FY2013.
Still yielding 8% despite recent price surge, BUY. We continue to like HPHT for its resilient earnings and attractive dividend yields of 7.7- 8.3% p.a., providing a yield advantage over the S-REITs sector of 2.0- 2.6%. While current sentiment surrounding the global economy remains tentative, we believe HPHT remains well poised to benefit from an economic recovery. We leave our DDM assumptions largely intact, and maintain our Target Price of USD0.925. Reiterate BUY.
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