HUTCHISON PORT HOLDINGS TRUST (SGX:NS8U)
Hutchison Port Holdings Trust - Poised For Further Re-Rating; FY22F Dividends To Jump
- Container volumes at Yantian port rose by 27% y-o-y in October while Kwai-Tsing port also posted 3% growth.
- Overall throughput has picked up firmly since June 2020 and Hutchison Port Holdings Trust is on track for a strong 2H20.
- With the 5-year HK$1bn per annum debt repayment plan ending in FY21F, we forecast Hutchison Port Holdings Trust's FY22F dividend to jump 60% y-o-y to HK16cts, or 13.6% yield at current Hutchison Port Holdings Trust share price.
Brighter outlook on firm Oct volumes and Biden win
- Yantian’s October throughput jumped 27% y-o-y to 1.148m TEUs, continuing the strong rebound in volumes we’ve seen since June. In the first half of 2020, volumes at Yantian dropped 12.2% y-o-y but increased by 16.1% from July to October 2020.
- Kwai-Tsing’s October throughput increased 3% y-o-y to 1.249m TEUs, continuing the rebound in volumes seen since June. In 2019, Hutchison Port Holdings Trust (SGX:NS8U)’s volumes in Hong Kong accounted for 70% of Kwai-Tsing volumes.
Raising Hutchison Port Holdings Trust's FY20F and FY21F earnings forecast and longer-term outlook.
- Even assuming moderating throughput volumes for November and December due to the resurgence of COVID-19 in the U.S. and Europe, we can expect Hutchison Port Holdings Trust’s results to be much better in 2H20 than 1H20 and hence raised our earnings forecasts for FY21F and FY22F by 10.3% and 3.4% respectively by adjusting our throughput assumptions.
- At the same time, we believe that a Biden win should also ease US-China trade tensions in the medium term, and help China’s export volumes to the U.S. to stabilise.
More confident of higher dividends from FY22F onwards.
- With an improving earnings outlook bolstering Hutchison Port Holdings Trust’s cash flow and balance sheet, we are confident that the Trust will not look to extend its 5-year HK$1bn per annum debt repayment plan beyond 2021 and therefore raise its dividend payout from FY22F onwards.
- Thanks to decreasing overall debt and stabilising EBITDA, Hutchison Port Holdings Trust’s net debt-to-EBITDA ratio is projected to improve from 3.9x as at end FY17 to 3.1x by end FY21F.
- Including dividends paid to non-controlling interests (of Yantian Port), we expect Hutchison Port Holdings Trust to raise its total dividend payout to 47% in FY22F, from 36% - 38% of EBITDA from FY19 to FY21F. This compares to 51% in FY16, the year before the debt repayment plan kicked-in.
- 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.
- Maintain BUY on Hutchison Port Holdings Trust with a higher US$0.22 target price, as we impute higher assumptions to factor in an improved outlook.
Paul YONG CFA
DBS Group Research
|
https://www.dbsvickers.com/
2020-11-17
SGX Stock
Analyst Report
0.22
UP
0.140
