Hutchison Port Holdings Trust

[Drizzt]

its a business trust that is based on a fixed concession with risk of being terminated when the concession ends. you have to evaluate whether the cash flow measures up to the price you initially pays

[RBM]

To further reinforce the comments made by others in this thread (if such reinforcement is necessary).......

If I read the SGX website correctly, there have been 10 Company IPO's which have resulted in shares being placed on the SGX so far this year, 2011. They are as follows ........... in reverse chronological order ............

1. Perennial China (listed just last week)
2. Mapletree Trust
3. HPH Trust (Hutchison)
4. Dyna-mac
5. UE E&C
6. Malaysian Smelting
7. Sri-Trang
8. Harry's Holdings
9. XMH
10. Zhongmin BaiHui

I have excluded the Hyflux Preference Share - that doesn't really count but its performed better than the majority of the list above!

I realise it is early days. But..... seven of these ten are trading below the IPO price, some badly below (e.g. Harry's 13 cents today vs 22 cents IPO price, HPH ~ 20% below the IPO price in S$ terms). Only three of the ten are trading above their IPO subscription price - Dynamac, Malaysia Smelting (up marginally, S$ 1.80 vs. S$ 1.75) and the simply unbelievable Zhongmin BaiHui (read the Valuebuddies thread on that one and try to make sense of the post IPO share performance!). This year, the overral SGX market has performed far far better than the average performance of these IPO's.

What does this mean for me? I'll now heed the words of the wiser guys than I who contributed to this thread over the last week - while I will try to carefully weigh up an IPO offerring that interests me, I will be eyes-wide-open aware that the near-term prospects for share price appreciation are poor. Its better to wait until the share price has "settled down" (or do I mean gone down?).

[Vested? - I'm not vested in any of the ten recently listed companies above. I am vested in Hyflux Preference Shares and my better half subscribed to the HPH Trust IPO. I'm looking at Harry's Holdings but will not go in at the current price]

[D123]

Hutchinson Port Holdings Trust has just released results for operating period 15 Mar 2011 to 30 Jun 2011.

Link:
http://info.sgx.com/webcoranncatth.nsf/V...1002D0F4D/$file/Interim_Announcement_30June2011.pdf?openelement

Some snippets:
- NAV of HK$88.3bn, NAV net of goodwill of HK$46.7bn
- Earnings of HK$1bn, Earnings attributable to Trust unitholders of HK$0.67bn
- Declared distributions of HK$1.25bn

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I just realized that declared distributions is more than share reserves and therefore, retained earnings also. So I guess Trusts are not subject to the rule under Company Law of paying distributions only from retained earnings?

[d.o.g.]

I just realized that declared distributions is more than share reserves and therefore, retained earnings also. So I guess Trusts are not subject to the rule under Company Law of paying distributions only from retained earnings?

REITs and Business Trusts that are incorporated in Singapore pay distributions out of cash flow. So in accounting terms the distributions can be paid out of capital, not just earnings.

[D123]

I see, thanks for the clarification.
Let's see how future distributions are like then.

[yfreebee]

Re: Hutchison Port Holdings Trust

This trust price has been on a continual decline since its IPO, I think the IPO was priced at a 30 p/e so at $0.70 the p/e at 21 is still a little high when you compare it to electric utilities etc

Can anyone help explain this continuous slide in price and at what is the likely price it will bottom out.

[Nick]

Independent Director Sng Sow-Mei purchased 1 million units last week from open market. The unit price closed at US$0.61 - a far cry from its IPO price of US$1.01 at the start of the year ! Even at this low price (based on my calculations), the annualized PER stands at 18.5 which gives to rise to an earning yield of 5.4%.

Calculations:

3.5 months EPS: 7.51 HK cents
12 months EPS: 25.75 HK cents or 3.29 US cents
Share Price: US$0.61
PER: 18.54

I believe HPHT pays out its depreciation cash-flow as well which accounts for the higher DPU guided to be 5.9 US cents for FY 2011.

(Not Vested)

[yfreebee]

Thanks Nick for your input, looks like it would not be reasonable value until it goes below US 0.50 !

[Nick]

Alternatively, we can also argue that the price to renew/re-tender for lease renewal could be significantly smaller since HW sold the port portfolio to HPHT and made HK$44.3 billion profit from the disposal. I believe this is why HPHT has HK$41.6 billion worth of goodwill on its books. This implies that the cost of acquiring the concession is significantly lower than what is being carried in HPHT books so the real depreciation could be a lot lower ?

HPHT directors continue to purchase units from open market.

(Not Vested)

[Nick]

Seems directors don't mind buying shares at < 60 cents. I think the NAV (less goodwill) is around this price.