According to Ng, writing in his June 24 note, HPH Trust's FY2025 results reaffirmed that its terminals in mainland China have shown operational resilience. Revenue, operating profit and profit attributable to unitholders all indicated improvements.
However, distribution per unit was down from 12.2 HK cents paid for FY2024 to 11.5 HK cents for FY2025, as HPH Trust got to set aside statutory reserves for its Yantian terminals, required under the company laws of China. Ng calls this move "the clearest example of structural leakage." Excluding this mandatory reserve impact, DPU would have been 14 HK cents, says Ng, citing the management.
The importance of Yantian needs to be emphasised. Ng describes Yantian as HPH Trust's key operating asset, supported by its strategic deep-water position in eastern Shenzhen and role within South China’s export gateway network. "Yantian can remain strong, but unitholder returns depend on how much cash survives interest, tax, non-controlling interest, reserve and debt-service layers," warns Ng.
He points out that non-controlling interest remains the largest structural leakage item. In FY2025, profit attributable to NCI was HK$1.71b billion, compared with HK$748 million attributable to HPH Trust unitholders, reflecting the trust’s partial ownership of key Chinese Mainland assets.
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"This structure cuts both ways: NCI absorbs part of the earnings impact from higher consolidated interest cost, partially cushioning unitholders, but it also limits unitholder participation in operating upside," says Ng.
As such, he has shifted his valuation anchor from asset-value re-rating to sustainable DPU. "Following FY2025, we place greater weight on forward DPU rather than EV/EBITDA or port transaction read-through. EV/EBITDA remains a peer cross-check, but dividend yield is the more relevant anchor for HPH Trust’s listed units," says Ng.
Ng notes that at the June 22 close of 18.7 HK cents, HPHT's FY2026 distribution yield of around 7.9% remains "supportive" for existing holders. "However, new entry requires either a wider yield spread or clearer evidence that DPU has stabilised through the FY2026 refinancing and statutory reserve cycle," says Ng.
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For now, key re-rating watchpoints include the upcoming 1HFY2026 interim DPU, 2026 refinancing cost, statutory reserve treatment, NCI payout behaviour, revenue and container volume handled. Lower reserve or normalised non-controlling interest payout could reopen upside; a DPU cut or weaker Chinese Mainland revenue/TEU would further pressure risk-reward.
HPH Trust units, as at 11.12 am, traded at 19 cents.
