DBS Vickers Research, Feb 12
Q4-FY13 operating results for Hutchison Port Holdings Trust were below (expectations), but H2-FY13 DPU (distribution per unit) of 22.3 HK cents was better than expected.
The trust is looking to deliver at least stable DPU in 2014, driven by expected operating profit improvement as a result of mid-single digit volume growth.
There were signs of improvement in US/EU trade flows, and we look for a 3-4 per cent volume growth in FY14 in the trust's ports.
We maintain our view that the worst is over for HPHT and reiterate our "buy" call. While we should see improving HK operations and a mild uptick in throughput volumes next year, higher operating costs (including staff costs) and higher taxes will impact longer term valuations and hence, we cut our target price to US$0.76 (previously US$0.80) to account for the above.
HPHT is a proxy to global recovery theme, and prospective yield of 8.2 per cent for FY14 is attractive.
BUY
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