HUTCHISON PORT HOLDINGS TRUST (SGX:NS8U)
Hutchison Port Holdings Trust - Headwinds Persist
- Weak throughput volume.
- FY19 DPU was 11 HK cents.
- Lower Fair Value estimate of US$0.14.
FY19 results were broadly in-line with expectations
- Hutchison Port Holdings Trust (SGX:NS8U)’s 4QFY19 revenue and other income fell 11% y-o-y to HK$2.7b due to lower container throughput volumes. See Hutchison Port Holdings Trust Announcements.
- Operating profit decreased by 17% y-o-y to HK$750.7m while PATMI turned from a loss of HK$12.1b in 4QFY18 to HK$62.3m in 4QFY19, mainly due to the absence of impairment loss recorded in 4QFY18. Stripping off the impact of impairment loss of HK$12.3b, PATMI would have been 25% y-o-y lower as compared to 4QFY18.
- Full-year PATMI was HK$528m, HK$12.1b or 117.8% y-o-y higher than last year. However, if we were to exclude the impact of impairment loss, FY19 PATMI would have dropped 28% y-o-y.
Full-year throughput dropped 3% YoY
- For FY19, the container throughput of HPHT fell 3% y-o-y, with the throughput of YICT decreasing by 1% y-o-y while the combined throughput of HPHT Kwai Tsing dropped 6% y-o-y, weighed by U.S-China trade tensions and a competitive environment.
- As expected, US cargo volumes remained weak in 4QFY19, which fell 19% y-o-y due to high base volume in 4QFY18, resulting in an overall decline of 9% y-o-y in FY19. Cargo volumes to Europe, however, rose 4% y-o-y in FY19.
DPU guidance of 8-11 HK cents for FY20
- Hutchison Port Holdings Trust's FY19 DPU was 11 HK cents which is at the lower end of management’s previous guidance of 11-17 HK cents and is below our forecast of 12 HK cents. Note that total distributable income actually came at 13.8 HK cents per unit but management decided to reserve 0.025 HK cent per unit (~HK$250m) for additional debt repayment amid macro uncertainty. See Hutchison Port Holdings Trust Dividend History.
- Looking into FY20, DPU guidance is 8-11 HK cents, reflecting management’s cautious views on macro outlook and further downside risk to operations. The actual dividend payout will much depend on the macro environment, the persistence of coronavirus and the pace of recovery in production.
- While we see export volumes picked up quickly after the SARS crisis, the volume visibility remains unclear at this point of time. Management noted the risk of supply disruption and diversification of orders if the coronavirus situation further escalates and may not be resolved in the next 1-2 months.
- We revise our DPU forecast for FY20 from 13 HK cents to 9 HK cents, and trim our forecast growth rate for overall throughput volume to -3% y-o-y for FY20. After adjustments, our fair value eases from US$0.155 to US$0.14.
- Downgrade to SELL.
- See Hutchison Port Holdings Trust Share Price; Hutchison Port Holdings Trust Target Price; Hutchison Port Holdings Trust Analyst Reports; Hutchison Port Holdings Trust Dividend History; Hutchison Port Holdings Trust Announcements; Hutchison Port Holdings Trust Latest News.
Chu Peng
OCBC Investment Research
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https://www.iocbc.com/
2020-02-11
SGX Stock
Analyst Report
0.14
DOWN
0.155
