Port protests overshadowed operations.
According to DBS, headline net profit declined 15% y-o-y to HK$380m in 1Q13, but this included about HK$56m in one-off fees to the manager; excluding this, net profit would have declined a milder 3%.
DBS noted that this is still below its expectations, as it is expecting flattish numbers for 1Q13, which is usually a seasonally weaker quarter.
HK volumes disappointed (down 7%) while the strong 6% growth in Yantian Port throughput helped to offset that to an extent. HK port protests overshadow operations, but risks have largely been mitigated.
The protests by a section of port workers in HK affiliated to trade unions have dragged on for a more than a month now, and this will have an impact on performance of HPH Trust’s HK operations for 2Q13.
The terminals have been only operating at 80% capacity in April and it could be a few more weeks before normalcy is restored. HPHT management has taken steps to mitigate the risks, as we have outlined inside in more detail, but we expect there will be some structural increase in cost base, going forward. Contribution from ACT will help offset some of the impact.
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