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HUTCHISON PORT TRUST -HIGHEST YIELD AT ROCK BOTTOM
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Starship
Supreme |
17-May-2019 09:44
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Very, very ugly company with very, very ugly numbers........................  HPH Trust to improve operational efficiency to counter slowing growth due to US-China trade war By: Amala Balakrishner 20/05/19, 07:30 amSINGAPORE (May 20): Hutchison Port Holdings Trust (HPH Trust), which operates container terminals in Hong Kong and Shenzhen, is feeling the full-blown effect of the US-China trade war, with container volume handled down and revenue stagnant. For FY2018 ended Dec 31, HPH Trust&rsquo s throughput for its Yantian port in Shenzhen managed to grow by 4% over FY2017, helped by front-loading of cargo by shippers in 4QFY2018. They were trying to avoid the 25% tariff hike to be imposed by the US on Chinese exports in January 2019. However, the combined throughput for HPH Trust&rsquo s Hong Kong terminals was 7% lower over the same period, owing to a reduction in transshipment cargo. As a result, HPH Trust&rsquo s overall throughput volume fell 1% y-o-y to just over 24 million twenty-foot equivalent units (TEUs) in FY2018. The decline in throughput volume may seem slight, but the financial figures were disappointing. In 4QFY2018, HPH Trust took an impairment of HK$12.29 billion ($2.13 billion) on its assets. The company had to bite the bullet as it expects changes in shipping patterns, owing to the relocation of manufacturing activities outside China. As at March 31, 2019, HPH Trust carried a remaining goodwill of HK$11.3 billion on its balance sheet. The impairment caused HPH Trust to report a net loss of HK$12.1 billion in 4QFY2018, versus earnings of HK$237.8 million in the year-earlier period. Excluding the impairment, HPH Trust would have booked earnings of HK$182.8 million, down 23.1% y-o-y. &ldquo Our business is macro-driven. The focus on the US-China trade war, which hit us [hard] in [4QFY2018], has made our operating profit unsteady,&rdquo said Gerry Yim, CEO of HPH Trust&rsquo s trustee manager, at a recent media briefing. For FY2018, HPH Trust posted losses attributable to unitholders of HK$11.6 billion, versus HK$944.2 million for FY2017. Revenue for the year was nearly HK$11.5 billion, down 1% from FY2017. Meanwhile, HPH Trust&rsquo s share price continues to disappoint. Year to date, it is down 6.12% to close at 23 US cents on May 15. By contrast, the STI was up 4.89% over the same period. Long-time unitholders of HPH Trust will be familiar with the poor share price performance. HPH Trust, backed by Hong Kong tycoon Li Ka-shing&rsquo s flagship entity Hutchison Whampoa, was listed with much hype in March 2011 at US$1.01. With nearly US$6 billion raised, HPH Trust was one of the largest Singapore Exchange IPOs. IPO investors here enamoured by its connection with Li soon realised that perhaps it was not always profitable to buy things Li wanted to sell. HPH Trust, despite having the backing of other institutional shareholders such as Singapore&rsquo s Temasek Holdings-owned port operator PSA International, never went above the IPO price. Throughout the years, there was a steady stream of earnings letdowns caused by factors ranging from workers&rsquo strikes to unfavourable new business policies in either China or Hong Kong. Finance costs also remained a constant bugbear. The current US-China trade war is is just the latest blow. With its structure as a business trust, HPH Trust&rsquo s draw for investors is its distribution. Again, that has not met expectations. The highest payout was 51.24 HK cents in FY2012. In line with lower earnings, HPH Trust will be paying a distribution per unit of just 17 HK cents for FY2018, down from 20.6 HK cents in FY2017. Based on May 15&rsquo s closing price of 23 US cents, it has a yield of 9.4%, which gives the company a market value of just over US$2 billion. For the current FY2019, HPH Trust is guiding for a payout of between 11 and 17 HK cents. HPH Trust&rsquo s management briefing with the media took place on the afternoon of April 26. Earlier that morning, HPH Trust&rsquo s board, led by chairman Canning Fok, had to again face frustrated shareholders at its annual general meeting. A shareholder, of example, asked whether HPH Trust would be privatised so that he could be &ldquo put out of [his] misery&rdquo . Besides chairing HPH Trust, Fok is also an executive director of CK Hutchison Holdings, the parent company of Hutchison Port Group Holdings and HPH Trust&rsquo s largest shareholder. At the AGM, Fok, the long-time right-hand man of tycoon Li, refuted reports that its 30% stake in the trust is up for sale. &ldquo We are not selling. We will hold it until 2047,&rdquo he said, referring to the year when the lease of the land on which the Hong Kong terminals sit expire. Efficiency, seaport alliance While there was a brief glimmer of hope that the US and China might call a truce on the trade war, the negative impact has been felt for some time. For 1QFY2019 ended March 31, HPH Trust&rsquo s total throughput across its ports was down 2% y-o-y to just below 5.5 million TEUs. The drop was mainly due to a decrease in transshipment volume for its Hong Kong terminals, but this was offset by growth in Yantian, although that was lower than expected because of the trade war. For 1QFY2019, earnings dropped 33% y-o-y to HK$96.9 million. Revenue in the same period was unchanged at HK$2.68 billion. At the media briefing, the trustee managers tried to put a positive spin on the earnings results. Diana Lee, the chief financial officer, maintains that holding costs down remains a priority. &ldquo While we had substantial losses from the non-cash impairment, we have managed to keep debt low, as announced in our 2016 debt repayment plan,&rdquo she says, referring to the HK$12.29 billion impairment booked in 4QFY2018. As at March 31, the company had long-term debt of HK$36 billion, down from HK$39.6 billion as at Dec 31, 2018. HPH Trust spent less on capital expenditure as well in the last financial year, as it had completed some construction works at Yantian, says Lee. Capex was 12% lower y-o-y in FY2018, dropping from HK$841 million previously to HK$744 million. CEO Yim also points out that HPH Trust is trying to improve operational efficiency. For example, the different terminals in Hong Kong are now covered by a co-management agreement, which allows more flexible use of available capacity. &ldquo We will continue to see the benefit of that effort for the next two to three years,&rdquo he says. Yim and Lee also hope that the recently formed Hong Kong Seaport Alliance will help lower costs further. The alliance, which consists of 23 so-called berth members, has agreed to work under a &ldquo terminal neutral&rdquo arrangement, where resources such as trucking capacity can be pooled together for greater efficiency. Challenges Despite the hit in throughput volume in both the Hong Kong and Chinese ports, Yim believes HPH Trust&rsquo s terminals are in a position to &ldquo bring in growth&rdquo . When trans-Pacific trade was booming nearly two decades ago, Yantian and other HPH Trust terminals, as gateways to the US, saw a boom. With the trade war in full swing now, the terminals are suffering. However, Yim is confident that there will be a turnaround. He says he is not looking to set up ports in other Chinese provinces to serve other regions, owing to the high barriers to entry, adding that &ldquo we are confident of our business&rdquo . Yim says his bigger concern is Hong Kong&rsquo s longer-term position in global shipping. Just like Singapore, the Special Administrative Region derives the bulk of its container handling volume from transshipment traffic. Some 70% of revenue generated by Hong Kong&rsquo s maritime logistics sector can be attributed to transshipment activities. Traffic to and from China accounts for 80% of Hong Kong&rsquo s transshipment business. As China&rsquo s own ports grow, there will be less need to go through Hong Kong. Other transshipment hubs in north and east Asia, such as Taiwan&rsquo s Kaohsiung and South Korea&rsquo s Busan, are strong competitors, as is Singapore. In 2018, PSA Singapore handled 36.3 million TEUs, an increase of 8.9% over 2017. Yim hopes that with recently implemented programmes such as the Hong Kong Seaport Alliance, the former British colony&rsquo s maritime industry can continue to contribute to the economy. &ldquo China and Hong Kong are still seeing economic growth, although at a lower rate. We can still overcome and grow,&rdquo he says. Sell-side analysts covering HPH Trust do not share Yim&rsquo s optimism &mdash at least in the near term. In his April 29 report, Paul Yong of DBS says the 1QFY2019 earnings were below expectations. Uncertainties from the trade war, a slowing Chinese economy and a weaker European Union economy are negative factors weighing down the outlook. Yong estimates that HPH Trust will generate earnings of HK$693 million in FY2019. &ldquo There is downside risk to our forecast, given the weaker-than-expected start to 2019,&rdquo writes Yong, who has a &ldquo hold&rdquo call and a price target of 26 US cents. https://www.theedgesingapore.com/print-edition/hph-trust-improve-operational-efficiency-counter-slowing-growth-due-us-china-trade-war |
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ehclim
Elite |
06-May-2019 10:39
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Impairment of goodwill is intangible. It is nothing but bullshit only. Never invest in such companies or biz trust. The reason why the dividiend yield is high because the risk is equally high.
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Raihan477
Member |
05-May-2019 23:13
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Impairment of goodwill means the loss of value after the company bought an asset. Let?s say bank A, which is a company buy Bank B at 1.5 times it?s net assets, say at $15 million. The 50% over which he buys the asset is classified, that is $5 million is taken as goodwill. So if bank A felt that at the end of the following year, it value the assets bought at 1.4 times its net value, there is an impairment of goodwill of $1 million.
Companies, sometimes buy as asset an inflated price and charge it as goodwill over the net asset value and would impair that goodwill over time. The impairment is taken as an expense and does decrease the profit of the company.
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Aryan_Jain
Member |
05-May-2019 18:44
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Can someone explain to me what the " Impairment of Goodwill" loss of 11 Billion HK$ on the financial statement is? | ||||
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FreedomInvestor
Member |
29-Apr-2019 10:37
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From OIR: Hutchison Port Holdings Trust: Not for sale We note that there was a typo in a Bloomberg report on Friday afternoon wrongly suggesting that HPHT was for sale. HPHT is *not* for sale the Bloomberg article has been corrected. Hutchison Port Holdings Trust&rsquo s (HPHT) 1Q19 results were within expectations. While operating profit was up 1% YoY, PATMI dropped 33% YoY mainly on the back of higher interest costs, making up 25% of our full-year forecast. HPHT&rsquo s throughput for 1Q19 was down 2% with Yantian throughput up 5% and Kwai Tsing throughput down 10%, the latter partly due to a high base effect. Management is keeping to its DPU guidance of 11 HK cents to 17 HK cents for FY19F. Our FY19F DPU forecast remains at 13 HK cents which translates into a dividend yield of 6.9% as at 26 Apr&rsquo s closing price. Going forward, we keep watch on global economic growth figures, ongoing discussions regarding the trade war, and possible cost-saving synergies from the Hong Kong Seaport Alliance. |
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Starship
Supreme |
27-Apr-2019 10:23
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AttasBoss
Elite |
27-Apr-2019 09:49
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What will be the floor to pick? | ||||
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Observers
Elite |
27-Apr-2019 09:30
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$20 watson voucher.
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FaceTheFact
Member |
27-Apr-2019 00:54
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Danger, Danger where are YOU? Since you pride yourself to be the best investor in Midas lor!! Don' t be mad here, I' m writing the Danger Style........ dyodd Hutchison Port Holdings Trust Q1 net profit down 33.4%https://www.businesstimes.com.sg/companies-markets/hutchison-port-holdings-trust-q1-net-profit-down-334 |
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FreedomInvestor
Member |
26-Apr-2019 17:54
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Did anyone attend the AGM today? Any interesting thing discussed? | ||||
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alexmay34
Veteran |
26-Apr-2019 16:35
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What is the news., Some things going on? | ||||
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Know-Your-Stuff
Senior |
19-Apr-2019 16:39
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There is a saying : when LKS sells anything, only a dumb fool will buy. Unless one think he is smarter than LKS. :) | ||||
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pasttime
Supreme |
19-Apr-2019 15:43
Yells: "gold silver are real money. not others iou." |
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the man behind is the master. he wants it up or not only. | ||||
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FreedomInvestor
Member |
18-Apr-2019 23:03
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Strategic review is the magic word these days.... Hope management can do shareholders a favor and get some consultants on board for a strategic review... Lol | ||||
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danger
Supreme |
18-Apr-2019 16:11
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THIS GEM DOING A ROCK SOLID CONSOLIDATION FOR NEXT ROCKET | ||||
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Starship
Supreme |
07-Mar-2019 09:15
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At 52-week LOW again this morning. Li Kah Shing must be laughing all the way to the bank..............   
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huathuat88888
Elite |
20-Feb-2019 15:19
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Victor Li has been snapping up HK land parcels recently.
Now they call themselves CK Assets .
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huathuat88888
Elite |
20-Feb-2019 15:17
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HK Govt will announce HIT Ports Relocation Plans soon. In fact very very soon.
Watch.
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Starship
Supreme |
20-Feb-2019 15:14
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China' s southern Ports continue to cheong after Xi revealed his latest Greater Bay Area Integration Plan. But this counter continue to tumble........... Li Ka Shing is smart.  |
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tonylim2
Veteran |
19-Feb-2019 14:05
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Shouid be able tp get it below 0.20 soon . | ||||
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