Hutchison Port Holdings Trust - DBS Research 2020-06-01: Weak PMI Numbers A Warning

HUTCHISON PORT HOLDINGS TRUST (SGX:NS8U) | SGinvestors.io 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.






Paul YONG CFA DBS Group Research | https://www.dbsvickers.com/ 2020-06-01
SGX Stock Analyst Report HOLD MAINTAIN HOLD 0.12 DOWN 0.230



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