HPH Trust

HPH Trust: 1Q13 results slightly below, but mgt assures strike impact minimal. Net profit was HK$380m, -15% y/y and approx 15% below Street forecast. But stripping out non-recurring items (FX losses and costs related to the acquisition of ACT), recurring profits of HK$439m were only slightly below forecast. Mgt says the dockworkers’ strike at HPHT’s HIT terminal in HK, which began 28 Mar, has had little impact, with operations back to 85 – 90% from the 50% level in the initial days of the strike. Workers still on strike appear to be relenting with reports indicating they are now willing to accept lower wage rises (low double digit from 23% increase). Mgt reiterates that the strike has not had any material impact on its financial performance and will be offset by positive contributions from ACT. Deutsche estimates total revenue loss would account for <1% of total revenue for HPHT in 2013. Assuming 15% increase in HIT’s labor cost, Deutsche estimates FY13e DPU would be reduced by <1%. Deutsche reiterates Buy with TP US$0.92, expects HPHT’s avg yield to reach 7% over 2013-15e. HSBC maintains Neutral with TP US$0.77, notes HPHT’s share price has rallied 10% ytd and outperformed the STI by 3% as investors continued to favor yield.