Tuesday, February 5, 2013

HPH Trust

HPH Trust: AmFraser INITIATES Coverage with Buy Call and $US0.94 TP. Backed by its twin pillars of growth, believe HPH Trust is strategically poised to leverage on PRD’s growth potential. Yantian and HIT are equipped with competitive advantages such as natural deep-water facilities, superior land and sea connectivity as well as strong operational efficiency. These asset positives have underpinned HPH Trust’s resilience through the global financial crisis and will continue to support its sturdy growth going forward. HPH Trust has had a dismal performance since IPO, which house believe can be attributed to its mispricing at the start. While HPH Trust has recovered some ground since then, believe current valuations remain attractive. The present degree of undervaluation in HPH Trust could potentially be linked to softened trade conditions in the US, EU and China. Moreover, investors may be concerned with the sustainability of HPH Trust’s distribution yield on the back of company-specific factors such as rising tax rates and operating costs. The semi-annual distribution frequency of HPH Trust could have been another contributing factor as well. The key question is whether current valuations are overpricing in these concerns and we certainly believe so. HPH Trust’s current valuations present an attractive entry opportunity for investors to take part in an earnings growth story as global economic recovery gathers momentum and goes full steam ahead.

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