Hutchison Port Holdings Trust

The trust 2015 outlook isn't good. Dividend yield is the focus for trusts...

(not vested, and no interest in REITs and Trusts)

HPH Trust's payout ratio may be cut "significantly", says UBS

SINGAPORE (Nov 26): Hutchison Port Holdings Trust ( Financial Dashboard) may end up lowering its distribution payout ratio "significantly" as it grapples with higher costs and a slowdown in business, according to UBS.

The Swiss bank's distribution per unit forecasts of 38 Hong Kong cents for 2015 and 37 Hong Kong cents for 2016 are 7% and 11% below consensus estimates respectively.

"One of the major risks in 2015 is a potential interest rate hike, as the company is on a 100% floating rate, which is very low now," UBS analyst Robin Xu said in a note.

"It is difficult for HPH Trust to sustain 100%-plus dividend payout ratios forever, and there is potential risk that the dividend payout ratio may be cut significantly in the future."

Already, management has indicated that it was considering whether HPH Trust's mid- to long-term dividend policy should follow actual cash flow, Xu noted.

"We think a potential dividend payout ratio reduction is one of the major long-term risks."

HPH said at its recent results briefing that it was negotiating with liners for a potential tariff hike in 2015 to cover additional costs arising from, among other things, a need for more barges and inter-terminal trucking services.

Even so, "we are concerned about cost inflation in addition to a lack of a mid- to long-term volume growth outlook given that capacity constraints in Hong Kong and the potential free trade zone to be implemented in Shanghai may have a negative impact on Hong Kong’s transhipments," said Xu, who has a "neutral" rating and a price target of 67 US cents on the stock.
http://www.theedgemarkets.com/sg/article...y-says-ubs

Thanks for the heads up. The tide seems to be turning as the promise of increase volume didn't seem to be translating into higher net profit, and those of us who have holdings of this counter ought to review and adjust accordingly.

When superman Sells... it pays to stay away...

(26-11-2014, 10:00 AM)CityFarmer Wrote: The trust 2015 outlook isn't good. Dividend yield is the focus for trusts...

(not vested, and no interest in REITs and Trusts)

HPH Trust's payout ratio may be cut "significantly", says UBS

SINGAPORE (Nov 26): Hutchison Port Holdings Trust ( Financial Dashboard) may end up lowering its distribution payout ratio "significantly" as it grapples with higher costs and a slowdown in business, according to UBS.

The Swiss bank's distribution per unit forecasts of 38 Hong Kong cents for 2015 and 37 Hong Kong cents for 2016 are 7% and 11% below consensus estimates respectively.

"One of the major risks in 2015 is a potential interest rate hike, as the company is on a 100% floating rate, which is very low now," UBS analyst Robin Xu said in a note.

"It is difficult for HPH Trust to sustain 100%-plus dividend payout ratios forever, and there is potential risk that the dividend payout ratio may be cut significantly in the future."

Already, management has indicated that it was considering whether HPH Trust's mid- to long-term dividend policy should follow actual cash flow, Xu noted.

"We think a potential dividend payout ratio reduction is one of the major long-term risks."

HPH said at its recent results briefing that it was negotiating with liners for a potential tariff hike in 2015 to cover additional costs arising from, among other things, a need for more barges and inter-terminal trucking services.

Even so, "we are concerned about cost inflation in addition to a lack of a mid- to long-term volume growth outlook given that capacity constraints in Hong Kong and the potential free trade zone to be implemented in Shanghai may have a negative impact on Hong Kong’s transhipments," said Xu, who has a "neutral" rating and a price target of 67 US cents on the stock.
http://www.theedgemarkets.com/sg/article...y-says-ubs

Related sis co news... not the HPH listed on SGX...
Aussie mkt is one which superman has little clout and influence...

OPINION Jun 29 2015 at 3:32 PM Updated 1 hr ago
Hutchison runs up the white flag

Introducing new competition to the container business has been a strategic ambition of governments and past competition regulators alike.

by Matthew Stevens
Hutchison Ports has signalled retreat in its $700 million effort to bust the Australia's waterfront duopoly with the third operator's new chief executive telling staff on Friday that it planned to cut jobs and customer services.

A memo seen by The Australian Financial Review sent to "all business units" by chief executive Mark Jack warned that "over the next few weeks and months, there will be a noticeable reduction in our business".

Jack foreshadowed Hutchinson management's discussions with customers over a reduction of "active bids for services in the Australian market" and a reduction of the "size of our offering" to the local market.

Hutchison has refused to confirm or deny the memo but it is currently circulating around the industry and its unions.

"Unfortunately, this will result in job losses," the memo stated. "Until such time as we have spoken with our customers and worked through any issues with them, we are not in a position to confirm the number of positions that will be lost or the precise timeframes".

It is estimated that Hutchison employs about 100 people at its four-berth Sydney container terminal and considerably fewer at its foundation two-berth Brisbane terminal.

Jack, who replaced Hutchinson's original Australian boss, Stephen Gumley, only in August last year, introduced a bleak memo with the observation that it had been "a difficult decision".

"We hope it is the right decision and that we will be able to remain active in the Australian market but at a lower cost base to our current situation," he said.

When former boss Gumley left without much notice or fanfare last year there were rumblings that all was not well inside Hutchison's Australian frontier. Gumley, who was a former head of the Australian government's weapons procurer, the Defence Materiel Organisation, presented his departure as evolutionary. But his replacement by Hutchison's still Hong Kong-based regional boss, Jack, revealed to some in the industry that it was make-or-break time for the Australian business.

When Jack was appointed he was described by one local operator as a "toe-cutter with a regional remit". It has proved a good call and Hutchison's bulkier Australian competitors busied themselves on Monday working out what this pruning of its Australian offering might mean.

There are three core reasons that Hutchison is not competitive with Australian stevedoring's legacy operators, Asciano-owned Patrick Ports and private equity's partnership with Dubai Ports, DP World Australia.

First, market share has been harder to acquire and manage that anticipated when Hutchison introduced itself to the Australian market place as the third operator back in 2012. Second, the frontier operation was unable to secure the vital third cog of an eastern state's docks business when it lost the tender for Melbourne's new terminal to a solo Philippines operator. And finally, the company simply failed to get its cost base right because it got industrial relations wrong.

In April 2013, local Hutchison management put themselves right behind the competitive eight-ball in signing an enterprise agreement that appeared to surrender much of the industrial relations ground gained by its competitors over 15 years of hard grind.

The deal was built around a 30-hour week and delivered on union aspirations for recovery of waterside authority through a dispute resolution system that had been central to a year-long stand-off between the Maritime Union and the nation's biggest port operator, Patrick.

Hutchison also agreed to pay 12 per cent super upfront and to alter work classifications so that more workers would sit on higher rates of pay. All told, the agreement appeared to bake in a higher unit cost of labour for Hutchinson over its competitors.

In April 2013, we warned that Hutchison risked paying a high price for this indulgence of the past. Jack's commentary on the requirement now for a lower cost base would suggest we were right.

Asciano's contested introduction of robot cranes to its Sydney terminal amplifies how critical it is for determined management to be able to direct their docks and demonstrates just how far Hutchison has been left behind the pack.

Asciano currently sits as the number-two player in Sydney with 44 per cent of the contracted market. DP World sits on 53 per cent and that leaves a spare 3 per cent for Hutchison.

Through Asciano's rebuild at Port Botany, it has sub-contracted a lot of volume to Hutchison. But that work will now stop and, given that Asciano's robots leave it with half its previous workforce and with expanded port capacity, the third operator's ability to compete will be eroded further.

The $700 million question invited by Jack's announcement is whether or not this is the beginning of a final retreat from, Australia. The counter-view is that this is an attempt to put better foundation under its east coast bridgeheads in Brisbane and Sydney before either selling out or inviting some sort of joint venture with International Container Terminals, the Philippines operator that surprisingly won Melbourne's third terminal.

Certainly the need to redraft the cost base by redesigning the workplace agreements sits in support of the possibility that Jack's announcement might be tactical. It is understood that Hutchison recently tried, without success, to recut the 2013 deal.

The other triggers offered by the industry include speculation that is Hutchison had opened discussions with the NSW government about the port operator's obligation to build a new inland container terminal at Enfield.

There is, of course, the very clear potential that Jack's announcement has nothing to do with tactics and everything to do with running up the white flag on its aspirations to join the mainstream in Australian docklands.

Introducing new competition to the container business has been a strategic ambition of governments and past competition regulators alike. But if one of the world's biggest container carriers cannot make a go of it then it does rather look like the whole concept of a three-cornered port contest is a dream unfulfillable.

Seem like beside the weakening demand on TEU due to poor trading environment, supply is going to deal it with a double whammy of excess supply.

http://splash247.com/drastic-action-requ...-100m-teu/

I wonder if the consolidation if any, should help the few bigge ports?

HPHT's profits continue to slide...

http://infopub.sgx.com/FileOpen/HPH%20Tr...eID=462055

China recently been buying up ports. Hope they buy HPH to delist.

https://www.theedgesingapore.com/acquisi...-past-year

(19-07-2017, 10:42 PM)laksaman57 Wrote: China recently been buying up ports. Hope they buy HPH to delist.

If so, can China just let the lease run out and take it for free ?

Does any VB know why this stock has become so unloved today?

The drop in price to this level is unprecedented and quite sudden.

Any news on latest happening out there to share? Thanks so much.