HPH Trust

HPH Trust: 2Q14 results missed. Net profit fell 12.4% to HK$368.4m, while revenue edged up 1% to HK$3.1b, as Asia Container Terminals was deconsolidated. Throughput in HK rose 13.9% on higher transshipment volumes, offset by weaker intra-Asia cargoes, whilst throughput in China increased 7.7% on growth in transshipment and US cargoes. Average revenue/TEU fell for both Hong Kong (adverse throughput mix) and China (higher proportion of transshipment throughput handled). Bottom line was hit by higher staff costs and increased taxes. Particularly, taxes soared 61.8% after a tax credit for Yantian International Container Terminals (YICT) has been fully utilized, and also after the tax rate was doubled to 25% for YICT Phase 3 with the expiry of an exemption period. Nonetheless, management sounded upbeat on prospects, citing a consensus outlook on recovery in both the US and European economies, going into 2H14. Likewise, outbound cargoes for these 2 economies have been in an upward trajectory. Aside, cargo transshipment for Far East, Central Africa, South America and Oceania are expected to increase considerably. Interim distribution of HK18.7¢ maintained. HPHT is currently trading at 0.7x P/B