(BUY, US$0.615, TP US$0.75)
YTD Sept throughput in-line our forecasts but below mgnt guidance. Sept throughput volume for Yantian fell 4.6% YoY while COSCO-HIT volume rose 4.5% YoY. Yantian Sept throughput was slightly weaker than what we expected. YTD growth at Yantian and COSCO-HIT of -0.1% and 6.7% were within our FY11 estimates of 0% and 5%. We maintain our belowconsensus FY11F throughput growth forecasts of 3%/5%/0% for HIT, COSCO-HIT and Yantian respectively. Management guidance of 8-9% throughput growth for HIT and Yantian is not achievable, in our view, and the numbers may be guided down in the upcoming results. We maintain BUY with an unchanged DCF-derived TP of US$0.75. Our DPU estimates of US5.34¢ for FY11F (annualised) and US5.57¢ for FY12F are 9.5% and 15.5% below mgnt’s forecasts. HPHT is a 9% yield stock at this price.
Flat YTD throughput volume at Yantian. Sept throughput volume at Yantian fell 4.6% YoY and YTD growth of -0.1% was short of management’s guidance (stated in prospectus) of 8.7%. Yantian throughput was one of the weakest in the Pearl River Delta region due to slowdown in trade flow with Europe and the US. We maintain our estimate of zero throughput growth for Yantian in FY11.
Kwai Tsing terminals YTD growth still positive. Sept throughput at Kwai Tsing terminals fell 1.8% YoY but YTD throughput remained positive at +1.8% YoY. COSCO-HIT registered 4.5% YoY growth in Sept and YTD growth of 6.7% was better than the total throughput growth at Kwai Tsing terminals. We estimate Sept throughput at HIT of around 3%.
Valuation: We keep our financial forecasts unchanged. Our DCF-derived TP of US$0.75 is based on 8.34% WACC, 2-3% growth in FY13-20F and 2% annual growth until expiry of concession agreements.
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