On July 22, HPHT reported earnings of HK$265.1 million for the six months ended June 30, up 68% y-o-y. Revenue was up 6% y-o-y to HK$5.65 billion, thanks to a 7%y-o-y increase in overall throughput volume.
The strong results were also underpinned by effective cost control, with cost of services up just 4% y-o-y and total operating costs down 1.5% y-o-y, the analysts note.
For the current 2HFY2025, HPHT is "cautious", no thanks to the trade tensions and high base.
In the current 3QFY2025, volumes are expected to remain broadly flat y-o-y while the final quarter of the year may suffer from high-base effect when many companies front-loaded volumes in 4QFY2024.
"To mitigate the decline in US-bound volumes, HPHT continues to diversify across trade lanes, with growing volumes in intra-Asia, EU, Latin America, and the Middle East," state Yong and Wang.
The analysts expect a 6% y-o-y drop in US-bound cargo volume in 2HFY2025, largely from an estimated decline of more than 10% in 4QFY2025.
However, given HPHT's strong 1HFY2025 performance and growth from alternative trade lanes, they have revised their full-year throughput forecast for Yantian, one of the key terminals under HPHT, to +3% y-o-y, from -1.8% previously.
All in, Yong and Wang have adjusted their FY2025 revenue and net profit forecasts by around 2% and around 3%, respectively.
As an interim distribution, HPHT plans to pay 5 HK cents per unit, which is above the DBS forecast of 4 HK cents.
As such, they have raised their FY2025 DPU forecast to 12 HK cents, which falls within management’s guidance of 11.5 to 12.5 HK cents, implying an attractive yield of around 8%.
"While tariff uncertainty persists, HPHT's diversified trade exposure and Yantian’s strong regional connectivity and role in e-commerce logistics should support solid operating performance.
"In a lower interest rate environment, HPHT’s yield becomes more compelling, supporting a higher valuation," the analysts add.
HPHT units changed hands at 21 US cents.
