HUTCHISON PORT HOLDINGS TRUST
NS8U.SI
Hutchison Port Holdings Trust - 1Q16 Results Inline With Expectation
- Weak fundamentals expected for 1H16
- FY16 throughput expected to remain flat
- Maintain HOLD
Results in line with expectations
- 1Q16 core NPAT attributable to unitholders fell 27% to HK$210.1m, after stripping away the one-off government refund of HK$430.0m, and the additional depreciation due to a change in accounting estimate in 2015. This comes up to 13% of our full year forecast, which is in line with our expectations for weaker first half results for 2016; for a comparison, 1Q15 NPAT attributable to unitholders contributed 16% of the FY15 figure.
- In terms of topline, 1Q16 revenue was down 7% YoY to HK$2,752m due to lower throughput in its HK ports as well as RMB depreciation. This was mitigated by the tariff rate increments in both HIT and YICT.
- We note that costs of services rendered dropped more than proportionally, decreasing 10% YoY, helped by lower fuel prices and savings in operation costs.
HK throughput continues to decline, YICT stable
- HIT, COSCO-HIT, and ACT throughput decreased 12% YoY to 2.6m TEU due to weaker inter-Asian and transshipment cargoes. YICT throughput remained flat, decreasing by 1% YoY to 2.7m TEU due to weaker transshipment and empty cargoes, offset by low single-digit growth in the export trade to US and EU.
- The management expects outbound cargoes to the US to show a slight increase this year, while Europe export throughput remains flat.
- Overall, throughput at HPHT’s HK ports is expected to make a recovery in 2H16, such that HPHT’s FY16 throughput remains flat over FY15.
Debt restructuring over the next five years
- In anticipation of interest rate normalization, HPHT seeks to lower its Consolidated Gross Debt to EBITDA ratio to 4x, as opposed to the 5x guideline set previously. This necessitates repayment of a minimum of HK$1bn of debt annually beginning in 2017, for five years, ~HK$600m above the mandatory amortization currently being paid yearly.
- HPHT’s debt restructuring is expected to reduce total consolidated debt from HK$33bn to HK$28bn in 2021. This is expected to reduce interest costs going forward.
- For FY16 DPU, the management has left guidance unchanged at 30 to 32 HK cents.
- Our FY16 DPU forecast remains at 31 HK cents.
- We maintain HOLD with a fair value estimate of US$0.46.
Deborah Ong
OCBC Securities
|
http://www.ocbcresearch.com/
2016-04-19
OCBC Securities
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0.46
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