Hutchison Port Holdings Trust

[Greenrookie]

Sharing a news, it mentioned about the pearl river ports.

http://www.hellenicshippingnews.com/News...7a2ca5dba3

[Nick]

Surprised to see it at 68.0 US cents today on relatively high volume. Any ideas what is the probably yield next year ? Seems a lot of the business trust yields are expanding in recent months...

(Not Vested)

[Greenrookie]

Surprised to see it at 68.0 US cents today on relatively high volume. Any ideas what is the probably yield next year ? Seems a lot of the business trust yields are expanding in recent months...

(Not Vested)

My own estimates after accounting for capex and paying out 100% of FCF and taken into consideration 20% rise in labour cost and the new acquistion will yield 36HKD cents. If hongkong and Yantian slow down further, then yield will not be accurate.

Price looking attractive for re-entry.

I blog about it yesterday
http://sillyinvestor.wordpress.com/2013/...ce-target/

(not vested)

[Greenrookie]

P3 Port choices not restricted to P3 terminal ownership...

See news
http://www.hellenicshippingnews.com/News...bbe764cf14

Yantian is not owned by any of the P3 shipping giants but have 7 loops of call, hongkong has only 3

Conclusion of article:
t is worth noting that all of the industry comment to date has been on the basis of the number of loops calling at each port, with a number of individual ports being classed by some commentators as either “winners” or “losers”. However, such judgements are premature. Ultimately it is not the number of loops that matter to a port, it is the number of teu handled per vessel call, and this is a consequence of ship size deployed and the number of ports called at each end of a loop. A port could lose a loop but might still end up handling more teu overall. The recent example of an Ultra Large Container Ship call at ECT Rotterdam which involved an exchange of over 11,000 teu shows just how much a loop can be worth today in the real currency of ports – teu not vessel calls.

----------------------------------

At least Yantian will not be adversely by the P3 alliances, there are talks about the P3 shipping skipping Yantian...

[Nick]

Surprised to see it at 68.0 US cents today on relatively high volume. Any ideas what is the probably yield next year ? Seems a lot of the business trust yields are expanding in recent months...

(Not Vested)

My own estimates after accounting for capex and paying out 100% of FCF and taken into consideration 20% rise in labour cost and the new acquistion will yield 36HKD cents. If hongkong and Yantian slow down further, then yield will not be accurate.

Price looking attractive for re-entry.

I blog about it yesterday
http://sillyinvestor.wordpress.com/2013/...ce-target/

(not vested)

Thanks for the reply. I guess it needs to generate FCF of HK$1.6 billion in 4Q 2013 to meet your expectations ?

(Not Vested)

[Drizzt]

Surprised to see it at 68.0 US cents today on relatively high volume. Any ideas what is the probably yield next year ? Seems a lot of the business trust yields are expanding in recent months...

(Not Vested)

My own estimates after accounting for capex and paying out 100% of FCF and taken into consideration 20% rise in labour cost and the new acquistion will yield 36HKD cents. If hongkong and Yantian slow down further, then yield will not be accurate.

Price looking attractive for re-entry.

I blog about it yesterday
http://sillyinvestor.wordpress.com/2013/...ce-target/

(not vested)

what is your estimation of a conservative yield for HPH at this point?

[Drizzt]

ok i saw your FCF estimation of 4.9 mil for full year. i felt that not all companies you can estimate the capex and FCF as equal through all quarters. the capex like starhub may vary.

have you checked past workyears capex break down?

nice blog btw.

[Greenrookie]

ok i saw your FCF estimation of 4.9 mil for full year. i felt that not all companies you can estimate the capex and FCF as equal through all quarters. the capex like starhub may vary.

have you checked past workyears capex break down?

nice blog btw.

Hi drizzit,

The projected Capex for 2012 is 1.1 billion, and 1.7 billion HKD for 2011, but to payout ther projected DPU, they hold back capex in 2012 and only spend 584 million in 2012. They have said they will not hold back in 2013. So I thought 1.3 billion is a reasonable estimate for 2013. As long as capex dun exceed 2 billion, and earnings dun deteriorate further. I think we are looking at a worst case scenario of 5.9% yield. However, I feel that the worst case scenario is unlikely.

Thanks for your kind words on my blog. I read your blog regularly too

[Nick]

Hi Greenrookie,

I was reading your recent post and I don't think the FCF figures are entirely accurate -

3) Price paid, I am paying for a 7% yield at current price, using the conservative DPU of 36 cents. No brokerage houses IIRC forecast a DPU as low as mine. If they are right, I am happy. To pay this amount, they need to payout about 3.6 billion HKD. 9 months OCF is already about 3.7 billion. If you annualized it, you should get 4.9 billion. To have a FCF of 3.6 billion is not a tall order, accounting for capex of 1.3 billion in for the whole of 2013 would mean a capex of about 700 million in 4th quarter, not too liberal in my view, given that 9months capex is only 584 million. Even if capex increase to 1 billion, yield will still be above 6.5%. To me, a 6.5% -7% yield is sustainable in current circumstances for years to come, with potential for upside.

http://sillyinvestor.wordpress.com/2013/...-85-cents/

I do not think it is correct to assume that OCF - Capex = FCF since the Trust have substantial minority interest in the various ports that they own with majority stakes but consolidated fully into the Group financial statements. This means that the more accurate FCF = OCF - Capex - Dividends Paid to Minority Interest.

In 9M 2013, HPH Trust have registered a cash out-flow of HK$1.8 billion to Minority Interest. So the real FCF that can be distributed to unit-holders in 9M 2013 is around HK$1.5 billion. In 2012, no dividends were paid to Minority Interest in 4Q 2012 so I think the dividend paid to MI is fixed for the year. This means that 4Q 2013 FCF needs to be rather substantial to meet your forecast. Another means to meet your target would be to drawdown debt to finance capex.

The same problem occurs in trying to compute HPH Trust EV/ EBITDA. The EBITDA has both HPHT and the Minority Interest EBITDA combined, the debt fully consolidates both entities but the market capitalization only considers the value of HPHT stake. I faced a similar problem with CM Pacific since its largest expressay is only 51% owned - the minority interest needs to be paid its dividend too so I have to adjust the FCF for that. Similar EV/EBITDA cannot be calculated directly - I had to use a reverse EV/EBITDA to see if numbers make sense.

Please correct me if I am wrong. Keep up with the blogging mate !

(Not Vested)

[Greenrookie]

Hi Greenrookie,

I was reading your recent post and I don't think the FCF figures are entirely accurate -

3) Price paid, I am paying for a 7% yield at current price, using the conservative DPU of 36 cents. No brokerage houses IIRC forecast a DPU as low as mine. If they are right, I am happy. To pay this amount, they need to payout about 3.6 billion HKD. 9 months OCF is already about 3.7 billion. If you annualized it, you should get 4.9 billion. To have a FCF of 3.6 billion is not a tall order, accounting for capex of 1.3 billion in for the whole of 2013 would mean a capex of about 700 million in 4th quarter, not too liberal in my view, given that 9months capex is only 584 million. Even if capex increase to 1 billion, yield will still be above 6.5%. To me, a 6.5% -7% yield is sustainable in current circumstances for years to come, with potential for upside.

http://sillyinvestor.wordpress.com/2013/...-85-cents/

I do not think it is correct to assume that OCF - Capex = FCF since the Trust have substantial minority interest in the various ports that they own with majority stakes but consolidated fully into the Group financial statements. This means that the more accurate FCF = OCF - Capex - Dividends Paid to Minority Interest.

In 9M 2013, HPH Trust have registered a cash out-flow of HK$1.8 billion to Minority Interest. So the real FCF that can be distributed to unit-holders in 9M 2013 is around HK$1.5 billion. In 2012, no dividends were paid to Minority Interest in 4Q 2012 so I think the dividend paid to MI is fixed for the year. This means that 4Q 2013 FCF needs to be rather substantial to meet your forecast. Another means to meet your target would be to drawdown debt to finance capex.

The same problem occurs in trying to compute HPH Trust EV/ EBITDA. The EBITDA has both HPHT and the Minority Interest EBITDA combined, the debt fully consolidates both entities but the market capitalization only considers the value of HPHT stake. I faced a similar problem with CM Pacific since its largest expressay is only 51% owned - the minority interest needs to be paid its dividend too so I have to adjust the FCF for that. Similar EV/EBITDA cannot be calculated directly - I had to use a reverse EV/EBITDA to see if numbers make sense.

Please correct me if I am wrong. Keep up with the blogging mate !

(Not Vested)

Hi Nick,

Thank you for pointing out my mistake. I will repost your comment on my blog. I admits I don't quite understand how non-controlling interest work even when I google it and investpedia it. Now, I am much clearer.

Hmm.... I will have to reassess my numbers...

Thanks!!! again

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To get to my forecast... it means OCF has to be 5.53 billion HKD instead. Or 1.38 billion per quarter. In the case of 2013, 1.83 billion OCF in Q4. Look likes HPHT have to either further postphone capex or draw down loans.

I use a simplistic 0.65:0.35 shares of dividends in my calculation, if Yantian grows and Hong Kong slows, then such ratio again become inaccurate. For the lastest quarter, the ratio is 0.69:0.31.

It seems like I overpaid for it again.. hahah

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