HPH Trust

HPH Trust: Deutsche recommends to switch out of Reits to HPH Trust. Notes S-REITs valuations and yield have compressed following their extended run up, and with equity issuance a potential speed bump, the house sees limited total return potential for the REITs over the next 12 mths. HPH Trust on the other hand, is Deutsche’s top yield name within its portfolio, offering 7.4% FY13e and 7.9% FY14e. The house remains positive on the Chinese ports sector, on expected strong recovery of China’s exports. Notably for HPH Trust, its HK and Yantian terminals are well positioned to seize the opportunity of growing container vessel sizes, which suggests that it should further expand its market share going forward. The house sees limited impact from the recent strike, with operations having recovered to 80-90% of normal levels. Deutsche rates HPH Trust at Buy with TP US$0.92. . StanChart believes the impact on earnings and DPU is likely to limited if the strike ends soon. While the house has an Inline rating with TP US$0.81, it would be a buyer of the stock at US$0.75 if further weakness plays out.