HPH Trust

HPH Trust: 4Q13 results below street estimates due mainly to one-off items, although 2H13 DPU of HK$22.3¢ were above expectations; 4Q13 net profit slumped 47% y/y to HK$334.8m on the back of higher cost of services due to RMB appreciation, inflationary pressure, increased staff costs after the acquisition of Asia Container Terminal and higher container throughput. Revenue stayed flat at HK$3.1b. Hong Kong Terminals (HIT) recorded a 10.1% fall on weaker transshipment and US/EU cargoes, as well as lower revenue per TEU due to one-off concessions granted to liners after the industrial action. Meanwhile in China, Yantian ports saw container throughput rise 4.7% from growth in transshipment and US cargoes, although revenue per TEU was lower y/y from adverse throughput mix of containers from liners. Going forward, consensus outlook for US and EU are favourable in 2014, which is a major factor in determining the total volume of containers handled by HPH Trust. While China’s economy outlook remains favourable as government pledges to maintain policy stability and support steady growth. HPH Trust declared 2H13 DPU of HK22.3¢, bringing full year dividend to HK41¢, exceeding management's guidance of HK40¢. This translates to a yield of 8% based on the current price of US$0.66/share. Latest broker recommendations as follows: CS maintains Outperform with TP US$0.82 Deutsche maintains Buy with TP US$0.73 OCBC maintains Hold and lowers TP to US$0.63 (from US$0.74) UOB Kay Hian maintains Buy but lowers TP to US$0.80 (from US$0.88)