Looking ahead, OCBC expects more robust throughput figures in 4Q18 for both Yantian and Kwai Tsing, though it notes the front-loading of orders may result in weaker volumes for 1H19.
To recap, HPHT reported 3Q18 revenue dropped 6.1% y-o-y, with operating profit decreasing 8.9% y-o-y. PATMI dropped 11.4% y-o-y to HK$239.5 million ($42.2 million). 9M18 PATMI came up to 92% of our initial full-year forecast due to lower-than-expected revenue declines to OCBC’s overly bearish ASP projections.
See: HPH Trust reports 11% lower 3Q earnings of $42.3 mil as throughput falls; rejects ROFR offer
For 3Q18, HPHT’s throughput was down 7.3% y-o-y. 3Q18 Yantian throughput was up 0.1% y-o-y, with outbound cargoes to the US growing 4% y-o-y, while those to the EU declined 3% y-o-y. On the other hand, 3Q18 Kwai Tsing throughput was down 16.7% y-o-y, mainly due to a reduction in transshipment cargoes.
Management noted that Kwai Tsing’s September volumes were particularly bad, possibly due to the Typhoon Mangkhut. On the other hand, Kwai Tsing ASP was up 7% y-o-y mainly due to an unusually low tariff base in 3Q17, which in turn was the result of booking nine months of contractual discounts for a large customer during the quarter.
“We believe without this one-off low-base effect, HPHT’s Kwai Tsing ASPs were generally flat or up slightly on a y-o-y basis due to the decline in transshipment as a proportion of total volume,” says OCBC analyst Deborah Ong in the report.
OCBC fair value remains at US$0.36, after adjustments.
HPHT is currently trading at a 10.1% FY18F yield and at 0.42 times book which is more than two standard deviations below 0.75x its average since listing.
