Thursday, July 23, 2015


HPHT delivered 2Q15 net profit of HK$399.9m (+8.5% y/y, +40% q/q), which brought its 1H15 earnings to 40% of full year estimate. This marked a significant turnaround from 1Q15 when the infrastructure trust reported an almost 50% y/y drop in profit.

Revenue inched up 2.1% to HK3.1b from higher throughput at Yantian terminals (+4%) due to growth in US and empty cargoes, mitigated by weaker intra-Asia and transshipment cargoes at HIT (-2.5%)

Average revenue per TEU in HK grew 5.5% owing to tariff hikes as well as a favourable throughput mix by liners. Over at China, rates rose a more subdued 0.7%.

The improved bottom line reflected cost savings from lower fuel charges and better cost management, which helped to boost operating margin to 32.1% (+3.6ppt). As a result, operating profit grew 14.9% to HK$1b from HK$874.4m a year ago.

Management sounded cautious in its outlook for volume growth in 2H15, given the uncertainty over the eurozone debt crisis, but expects US cargo shipments to pick up. Meanwhile, the trust will continue to focus on containing costs and improving tariffs.

While interim DPU was slashed to HK$0.157 from HK$0.187 in 1H14, the trust is maintaining its full year guidance of HK$0.33 to HK$0.36. Based on the mid-point DPU of HK$0.345, this implies a distribution yield of 6.5%. The counter also trades at a slight 4% discount to its NAV/unit of HK$4.79.

The street has 4 Buy, 11 Hold, and 2 Sell calls on HPHT with a consensus TP of US$0.65.

Latest broker ratings:
HSBC maintains Hold with TP of US$0.65
OCBC maintains Hold, cuts TP to US$0.63 from US$0.68
Deutsche maintains Hold with TP of US$0.62
Citigroup upgrades to Neutral but cuts TP to US$0.605 from US$0.66

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