HUTCHISON PORT HOLDINGS TRUST (SGX:NS8U)
Hutchison Port Holdings Trust - Weak PMI Numbers A Warning
- China’s PMI: New Export Orders was just 35.3% in May 2020 following an equally dismal 33.5% in April.
- April throughput for Yantian fell by 23% y-o-y while for Hong Kong it was 5%; May numbers will also be weak.
- Cut Hutchison Port Holdings Trust (SGX:NS8U)'s FY20F/FY21F EPS by 28%/9% and lower FY20F DPS to HK 8cts from HK 10cts previously.
- Maintain HOLD with lower Target Price of US$0.12.
Dismal China PMI: New Export Orders data points to a sharp decline in throughput volumes for HPH Trust ahead
- According to data from CEIC, China’s PMI: New Export Order data was reported to be 35.3% in May 2020, versus 33.5% in April and a record low of 28.7% in February, making the 46.4% recorded in March an exception rather than the rule.
- Container throughput at Yantian port fell by 23% in April 2020, and by nearly 18% in the first four months of 2020. As a result, we can expect container throughput volumes at Yantian port to continue to be weak in May, noting that a 23% y-o-y decline in volumes was recorded in April. In addition, volumes at Hong Kong port are likely to continue to be impacted as well.
- While we can expect some improvement in the months ahead as many countries start to ease social distancing measures, the pace of recovery remains uncertain. Nonetheless, with the sharp drop off in throughput volumes thus far, we are cutting our throughput growth assumptions at Yantian Port to -10% (from-2%) for 2020 and -7% from -4% for Hutchison Port Holdings Trust’s Hong Kong operations.
- Meanwhile, according to data from Hong Kong’s marine department, total container throughput at Kwai-Tsing fell by 5% in April 2020 and has dropped by 5.3% for the first four months of 2020.
Maintain HOLD with a lower Target Price of US$0.12.
- With China’s PMI – New Export Orders a dismal 35.3% in May and 33.5% in April, Hutchison Port Holdings Trust is likely to report substantially lower throughput volumes and revenue in the first half of 2020.
- While we can expect some improvement in the months ahead as many countries start to ease social distancing measures, the pace of recovery remains uncertain. But, with the sharp drop off in throughput volumes thus far, we are cutting our throughput assumptions for Hutchison Port Holdings Trust and lower our earnings estimates by 28%/9% for FY20F/FY21F respectively.
- 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.
- With lower earnings expected and a higher gross debt to EBITDA ratio, we also cut our DPS forecast to HK 8cts for FY20F, compared to HK 10cts previously, which is now at the low end of management’s guidance given in February.
Paul YONG CFA
DBS Group Research
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https://www.dbsvickers.com/
2020-06-01
SGX Stock
Analyst Report
0.12
DOWN
0.230
