HPH Trust

China Ports / HPH Trust: Deutsche sees an improving outlook and compelling valuations for Chinese ports. Believes trade outlook has improved, and China’s port throughput to the US may surprise on the upside going forward, on the back of strong housing recovery in the US. Its bottom up checks also suggest that the confidence with mnftg exporters appears to be picking up lately, which gels with the macro leading indicators. In the mid-to-long term, believes Chinese ports should benefit from the rapid growth of China’s trade with Asean and emerging countries, more back haul cargo from developed countries and the strong growth of domestic trade. The house likes HPH Trust (TP US$0.83), as its terminals appear to be well positioned to capture the opportunity presented by growth in vessel size. Of the total existing orderbook, nearly 50% are now large-sized ships with TEU above 10k. Notes ports with appropriate infrastructure and reasonable cargo concentration should continue to gain competitiveness in this environment. Tips HPH Trust as its preferred higher yield player with a yield of 7.8% for 2013e.