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SHIPPING & MARINE | Staff Reporter, Hong Kong
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Hutchison Port Holdings Trust 1H14 profits edged up a measly 2%

Due to y/y container volumes growth.

Hutchison Port Holdings Trust's 1H14 revenue grew by 2% y/y, driven by 1H14 container volumes growth of 6% y/y.

According to a research note from Barclays, the return to solid volumes growth is driven by a recovery of US and EU consumer end-demand and a more stable labour situation in Hong Kong.

Meanwhile, management guides for FY14E volume growth of 5-6%. Further, the company declared an interim DPU of 18.7 HK cents, implying an annualized yield of 6.3% based on closing price on 25 July.

Here's more from Barclays:

The interim distribution ex-date is 1 August 2014. On the conference call, management expressed that it is on track to reach its guidance for a FY14E DPU of 41 HK cents.

Our FY14E DPU estimate is 37 HK cents. 2Q14 EPS was HK 4.23 cents, -12% y/y. 6M14 profit of HK$927mn accounts for half of our FY14E estimate of HK$1.85bn.

There were several one-off items in 1H14 from the deconsolidation of ACT since 14 March 2014 that is now recognized as an associate and an exchange loss from Yantian’s RMB-demoninated monetary assets.

Net of these items, we estimate that the 1Q14 operating income was nearly flat. We continue to expect 2014 to be a turnaround year for HPH Trust and expect container volumes growth to remain solid for the rest of the year.

HPHT is currently trading at 17.3x normalized 2014E P/E compared with Chinese port operators average of 14.9x 2014E P/E.

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