HPHT reported 3Q14 PATMI of HK$490.7m (EPU: 5.63 HK-cents), which dipped 9.0% YoY mostly due to continued cost pressures and a higher effective tax rate after YICT’s tax credit was used up in 4Q13; partially offset by HK$30m of exchange gains from RMB-denominated monetary assets. Accounting for divestment gains, we estimate that 9M14 PATMI constitutes 76.3% of our full year forecast, which we judge to be mostly within expectations. Maintain HOLD with an unchanged fair value estimate of US$0.68. While conditions remain mixed due to an uncertain outlook and persistent cost pressures, we see the downside to be limited here due to an attractive FY14F dividend yield of 8.0%. A potential positive catalyst could also come in the form of higher-than-expected tariff increases ahead.
3Q14 earnings in line with expectations
HPHT reported 3Q14 PATMI of HK$490.7m (EPU: 5.63 HK-cents), which dipped 9.0% YoY mostly due to continued cost pressures and a higher effective tax rate after YICT’s tax credit was used up in 4Q13; partially offset by HK$30m of exchange gains from RMB-denominated monetary assets. Accounting for divestment gains, we estimate that 9M14 PATMI constitutes 76.3% of our full year forecast, which we judge to be mostly within expectations. The trust reported 3Q14 revenues at HK$3,422.0m, up 1.7% mostly due to higher container throughput at HIT and YICT.
Outbound cargoes to the EU slowed over latest quarter
While outbound cargoes to the US continued its uptrend in 3Q14, we saw a slowdown in the outbound volumes to the EU due to a decline in demand and weaker new orders. Over the quarter, YICT’s throughput increased 12.4% YoY as transshipment and US cargoes grew, and throughput at HIT similarly increased 2.1% due to higher transshipment volume, offset in part by weaker intra-Asia cargoes. 3Q14 average revenue per TEU in HK grew YoY due to favorable throughput mix from liners while average revenue per TEU in China fell due to a higher mix of transshipment throughput handled.
Starting tariff negotiations with shipping lines
Maintain HOLD with an unchanged fair value estimate of US$0.68. While conditions remain mixed due to an uncertain outlook and persistent cost pressures, we see the downside to be limited here due to an attractive FY14F dividend yield of 8.0%. A potential positive catalyst could also come in the form of higher-than-expected tariff increases ahead. We understand that HPHT is starting negotiations with the shipping lines though management has indicated that they expect clients to be resistant to a sizeable increase due to profit headwinds currently. HPHT also clarified that discussions are still in an early stage and more color on the magnitude of the increase could come in 4Q14.
HPHT reported 3Q14 PATMI of HK$490.7m (EPU: 5.63 HK-cents), which dipped 9.0% YoY mostly due to continued cost pressures and a higher effective tax rate after YICT’s tax credit was used up in 4Q13; partially offset by HK$30m of exchange gains from RMB-denominated monetary assets. Accounting for divestment gains, we estimate that 9M14 PATMI constitutes 76.3% of our full year forecast, which we judge to be mostly within expectations. The trust reported 3Q14 revenues at HK$3,422.0m, up 1.7% mostly due to higher container throughput at HIT and YICT.
Outbound cargoes to the EU slowed over latest quarter
While outbound cargoes to the US continued its uptrend in 3Q14, we saw a slowdown in the outbound volumes to the EU due to a decline in demand and weaker new orders. Over the quarter, YICT’s throughput increased 12.4% YoY as transshipment and US cargoes grew, and throughput at HIT similarly increased 2.1% due to higher transshipment volume, offset in part by weaker intra-Asia cargoes. 3Q14 average revenue per TEU in HK grew YoY due to favorable throughput mix from liners while average revenue per TEU in China fell due to a higher mix of transshipment throughput handled.
Starting tariff negotiations with shipping lines
Maintain HOLD with an unchanged fair value estimate of US$0.68. While conditions remain mixed due to an uncertain outlook and persistent cost pressures, we see the downside to be limited here due to an attractive FY14F dividend yield of 8.0%. A potential positive catalyst could also come in the form of higher-than-expected tariff increases ahead. We understand that HPHT is starting negotiations with the shipping lines though management has indicated that they expect clients to be resistant to a sizeable increase due to profit headwinds currently. HPHT also clarified that discussions are still in an early stage and more color on the magnitude of the increase could come in 4Q14.
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