Hutchison Port Holdings Trust

Stabilization has ended!

Business Times - 14 Apr 2011

Hutchison Port trust struggles to top IPO price

Amid weak market, stock price dips after bankers stop stabilisation action

By JAMIE LEE

HUTCHISON Port Holdings (HPH) Trust has not touched anything above its IPO price of US$1.01 per unit since its listing nearly a month ago.

Units of the business trust closed yesterday at 95.5 US cents apiece, down 2.55 per cent, with some 100 million units traded. This followed the close of price stabilisation by its bankers this week. On Tuesday, stabilising manager Deutsche Bank said it has ceased to stabilise the unit price, after buying a total of 540 million units - all units offered under the greenshoe option.

Amid a poor market showing - as investors grappled with the nuclear fallout from Japan's massive earthquake - the stock went underwater on listing day. It touched US$1.01 between last Thursday and Monday, but gave up its gains afterward.

Market watchers say that concerns over the weakening greenback against the Singapore dollar still weigh on the stock. Distribution from the trust will be paid out in HK dollars, which is pegged to the faltering US dollar - which means forex losses if the Singapore dollar continues to strengthen as expected.

Foreign funds have been the main buyers of the stock, said UOB-Kay Hian executive director Chan Tuck Sing. 'This could partly be due to its parentage,' said Mr Chan, referring to HPH's honcho Li Ka Shing. 'Response from the local boys has not been that strong.'

The Singapore Exchange's move to facilitate the quotation and trading of HPH Trust in both Singapore dollars as well as US dollars, can mitigate some concerns, Mr Chan said. 'But with an issue of this size, local interest will barely make a dent.' He added that the stock's poor showing could be due to funds adjusting over-allotment from the IPO, which raised some US$5.45 billion.

A BT analysis earlier also noted that while HPH Trust offers fairly attractive yields - with a forecast seasonally annualised DPU for 2011 at 45.88 HK cent - the trust is not obligated to make minimum levels of payout as the real estate investment trusts (Reits) do.

Reits must pay out at least 90 per cent of their distributable income to unitholders to qualify for tax transparency on the amount they pay out.

The hefty IPO was widely seen as a coup for Singapore, which had established perimeters for the listing of business trusts ahead of long-time competitor, Hong Kong, where HPH's business is based.

This has mounted pressure on Hong Kong regulators to review its listing rules to accommodate business trusts, with Hong Kong's telecoms giant PCCW - led by Li Ka Shing's son Richard Li - lobbying for changes in this area to try listing its trust there.

(Not vested)

Goldman sachs initiates a buy call today with 12 month target of us$1.16.

http://www.remisiers.org/cms_images/rese...y_DBSV.pdf - a very comprehensive 67 page initiation report from DBSV !

wow! that's rare from our local brokerages.

I sold this at a 700 dollar loss!

(26-04-2011, 11:17 PM)Nick Wrote: http://www.remisiers.org/cms_images/rese...y_DBSV.pdf - a very comprehensive 67 page initiation report from DBSV !

They have apparently outdone themselves this time....

Next question I will ask is - why the motivation to do such a comprehensive report? Haha!

USD at a new low. Let's see 6 months time.

No post on this thread for over six weeks now. Perhaps because nothing positive seems to have happened in the meantime ......

I noticed that HPH Trust hit US$ 0.83 (repeat: US$ 0.83) earlier today. This despite "BUY" recommendations from the likes of Goldman Sachs and DBS-Vickers's war-and-peace treatise when the Trust was trading in the US Cents 90's range. This means that those who went in at the mid-March offerring time (IPO price US$ 1.01) are looking at a loss > 20% in Singie Dollar terms three months into the listing. I understand foreigners are offloading.

I can't help wondering what LKS is thinking about this. Even though it is very early days, this episode can't be good for his reputation........... lots of disafffected loyal investors subscribed to the offer - including my better half, who is (silently) baffled. She was drawn in by the name "Hutchison" and, if she's honest, the word "trust". I'm not vested for the record. Musicwhiz's comment of 27th April now apears prophetic - the Cheung Kong/Hutchison overlords have clearly pushed out the boat too far on this occasion.

So why the price drop ...... Is it because the currency of payout? ...... or is it because investors are now (rightly) wary of these kinds of "trusts" where no minimum level of payout is guaranteed? My own view is that the IPO was simply way overpriced and a loyal following fell for it (the brand coupled with the "trust" word??). May be if it falls a bit more, this one is worth looking at - I can't believe the model is flawed.

P.S. My better half, tough Chinese lady that she is, says I'm a "frog in a hole" for my views on this one (and other things for that matter) - I think thats how it translates.

LKS is not for others to make money, instead he makes money from others.

that's how Cheung Kong has been making money. Generations of HKers have been milked by him and his companies.

(10-06-2011, 03:49 PM)RBM Wrote: So why the price drop ...... Is it because the currency of payout? ...... or is it because investors are now (rightly) wary of these kinds of "trusts" where no minimum level of payout is guaranteed? My own view is that the IPO was simply way overpriced and a loyal following fell for it (the brand coupled with the "trust" word??). May be if it falls a bit more, this one is worth looking at - I can't believe the model is flawed.

I avoided HPH because I don't understand the business model well enough, and I also do not know the value of their port assets. Somehow I feel that at this stage of overall market valuations, IPOs do not come cheap anymore. Not that IPOs generally come cheap anyway - they are priced usually to make money for the ones selling shares, and not for the retail investor who subscribes for these shares.