DBS Vickers Securities on 21 June 2012
ASIA-US trades help prop up Yantian volumes year-to-date (YTD) in 2012. Continuing with the trend seen in April, Yantian Port operating data for May was again encouraging, with volumes growing 5.1 per cent year-on-year (y-o-y).
YTD volume growth at Yantian Port now stands at 2.1 per cent and is trending in line with our estimates even before the traditional peak season has started.
We think export bookings to the US are still holding up, though the European market remains weak and could weaken further.
Slow growth in volumes a reality but a repeat of 2009 - negative trade volume growth - is unlikely. According to our economists, the prospect of a Greek exit from the eurozone does not have to be another "Lehman moment" for Europe or the rest of the world.
The key driver for the sharp decline in container trades in 2009 was the credit crunch, which rendered trade financing very difficult.
The risk of a credit crunch remains lower this time around than in 2008-09, as liquidity is abundant in Asia and markets have had two years to think about the current situation and prepare for it.
Also, in 2008, the crisis was about US dollars, this time it's mainly the euro, which is not as important to Asia's trade financing as the US dollar.
FY2012-2013 distribution per unit (DPU) should still be sustainable even in bear-case scenarios. Under our base-case scenario, we expect the trust to meet its DPU guidance of 6.6 US cents for FY2012, after taking into account some degree of capex deferral.
We also devise two sets of pessimistic scenarios, but according to our calculations, unless tariff rates are affected materially, DPU for FY12/13 will still be above the (annualised) FY2011 DPU of six US cents.
But despite these largely secure cash flows, the trust is trading in excess of 9 per cent yield, which makes it one of our top large-cap high yield picks in Singapore.
BUY
No comments:
Post a Comment