Hutchison Port Holdings Trust

[Nick]

Hi Greenrookie, all sensible discussions are valuable since I can gain insight to what I missed.

On that HKD2650, HPH will need to generate lesser than that as it should have already got part of it from Q3. From the last few quarters' report the distributed incomes have been:
FY2011 - HKD4,206 SDG678 (I am assuming SGD:HKD of 1:0.1613)
FY2012 - HKD6,421 SGD1,036
FY2013 (expecting) - HKD5,021 SGD810

Cash from ops as followed:
FY2011 - HKD5,533
FY2012 - HKD5,635
FY2013 (9mths) - HKD4,499

Assuming all other cash outflows are "billed" under the cash remained of the proceed from IPO and bank loan taken during 2011 and they pay unitholders and non-controlling interesting out from OCF, based on total OCF so far (from 2011), they have already got enough at this point to meet the guided full HKD40 cents DPU for FY2013. Any cash generated from Q4 can go to pay all other expenses or add to the net cash (frankly I still have absolutely zero idea how to determine that distribution income). They seems more committed to the guided DPU payout so capex can come from other sources.

A few other thoughts/questions:
- I am expecting that they are going to refinance that HKD30bil+ odd current loan in the coming quarter.
- There is an item called "Customer relationships" in the balance sheet and I wonder what that is?
- Is the income statement of any use other than offering depreciation info in this case?
- Also the high PE might be due to it being seems as a perpetual business?

Well the lifetime of this business might be till-the-end-of-the-world type and when the port operation increases due to recovering economy, more cash might be generated and the business might worth more that they paid for. They might keep it for more cash or dispose it at a premium or do any other things necessary to get more money out of it.

Based on $0.85, the half year yield is about 3.9% - 4%.

Beside the financial figures which are drawn from their quarter reports, the rest are all my personal view. Not a call to buy, hold or sell.

(still vested and thinking but not so hard now!)

1) Your OCF figures didn't take into account of tax and interest expenses. The 9M 2013 OCF should be HK$3.698 billion after taking into account of these cash expenses. We can add in the dividend income from JV and associates to get 9M 2013 OCF of HK$3882.6 million.

2) The 40 cent HKD dividend is equivalent to a distribution HK$3.484 billion. The distribution to NCI for 2013 is HK$1.835 billion as well.

3) Assuming capex is entirely debt financed (is this sustainable ?), 4Q 2013 OCF needs to be HK$1.4 billion to pay unit holders and NCI.

4) Ports are not perpetual assets. They run on a concession. IIRC, the HK ports concession expires in 2047 while the ports in China expires in late 2040s and 2050s.

5) Results can improve when global trade rebounds. Not too sure how they derived the 40 cents target.

Please correct me if I am wrong.

(Not Vested)

[Greenrookie]

A article that is food for thoughts from Clarkson

http://www.hellenicshippingnews.com/News...c0b9548700

The Shifting Patterns of Chinese Box Throughput

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

Main point:

Top 3 ports of China, Shanghai, HK and ShenZhen, is growing very slowly, in fact, HK shrinks, and Shenzhen is flat, it is Shanghai that is still growing.

The next top 10 is growing better, and the pattern is shifting the ports outside the top 10 gaining growth.

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

One reason why I buy into HPHT is also I believe the revival of the major trade routes of china with europe and US, I am even more hopeful when I read the news the the guangzhou river delta area might become the second free trade zone after shanghai. I thought HK and Shenzhen ports should benefit rather significantly. I have also thought the smaller ports and the trend of mega ships will feed into the bigger ports transshipment load, it seems ships are going directly to the ports.

Lets hope my line of reasoning is right.

[valuebuddies]

same here, bought on the expectation of shipping recovery, but it was down more than 30% since ipo..

[CityFarmer]

A article that is food for thoughts from Clarkson

http://www.hellenicshippingnews.com/News...c0b9548700

The Shifting Patterns of Chinese Box Throughput

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

Main point:

Top 3 ports of China, Shanghai, HK and ShenZhen, is growing very slowly, in fact, HK shrinks, and Shenzhen is flat, it is Shanghai that is still growing.

The next top 10 is growing better, and the pattern is shifting the ports outside the top 10 gaining growth.

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

One reason why I buy into HPHT is also I believe the revival of the major trade routes of china with europe and US, I am even more hopeful when I read the news the the guangzhou river delta area might become the second free trade zone after shanghai. I thought HK and Shenzhen ports should benefit rather significantly. I have also thought the smaller ports and the trend of mega ships will feed into the bigger ports transshipment load, it seems ships are going directly to the ports.

Lets hope my line of reasoning is right.

May be the concern of P3 alliance, affected the investment sentiment of HPHT.

P3 Alliance Ref: http://www.forbes.com/sites/robertbowman...-carriers/

One of the concerns is, after the alliance is approved, the P3 alliance will shift their focus on vested ports. Among the P3 alliance, AP Moeller-Maersk has a stake in the Port of Tanjung Pelepas in southern Malaysia, while Mediterranean Shipping has a joint venture with PSA Singapore.

My 2 cents.

(not vested)

[Greenrookie]

A article that is food for thoughts from Clarkson

http://www.hellenicshippingnews.com/News...c0b9548700

The Shifting Patterns of Chinese Box Throughput

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

Main point:

Top 3 ports of China, Shanghai, HK and ShenZhen, is growing very slowly, in fact, HK shrinks, and Shenzhen is flat, it is Shanghai that is still growing.

The next top 10 is growing better, and the pattern is shifting the ports outside the top 10 gaining growth.

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

One reason why I buy into HPHT is also I believe the revival of the major trade routes of china with europe and US, I am even more hopeful when I read the news the the guangzhou river delta area might become the second free trade zone after shanghai. I thought HK and Shenzhen ports should benefit rather significantly. I have also thought the smaller ports and the trend of mega ships will feed into the bigger ports transshipment load, it seems ships are going directly to the ports.

Lets hope my line of reasoning is right.

May be the concern of P3 alliance, affected the investment sentiment of HPHT.

P3 Alliance Ref: http://www.forbes.com/sites/robertbowman...-carriers/

One of the concerns is, after the alliance is approved, the P3 alliance will shift their focus on vested ports. Among the P3 alliance, AP Moeller-Maersk has a stake in the Port of Tanjung Pelepas in southern Malaysia, while Mediterranean Shipping has a joint venture with PSA Singapore.

My 2 cents.

(not vested)

Hi city farmer,

For now, the ownership of ports is not the over-riding factor for P3 port of call.
http://www.hellenicshippingnews.com/News...bbe764cf14


There is also the G6, for these alliances to maximize cost savings, I think the bigger ports will still benefits disproportionally when trade recovers. Just my fat hope, haha...

[Dividend Warrior]

HPH Trust slumps, weighs on Singapore index
Published on Dec 05, 2013, 3:05 PM, ST

SINGAPORE (Reuters) - Hutchison Port Holdings Trust dipped as much as 4.5 per cent to its lowest in nearly two years as a strong technical level was broken, leading losses on the Singapore benchmark index.

HPH Trust fell to as low as US$0.64, a level unseen since January 2012, after breaking below US$0.675 in the previous session, which had been a key technical support since mid-November.

Analysts said that the break of that key technical level, combined with the uncertainty over the US Federal Reserve's stance on monetary stimulus on the market, made HPH Trust the worst performer on the index on Thursday.

The Straits Times Index dropped nearly 1 per cent to 3,130.76 by midday, on course for its biggest daily decline in more than two months.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.4 per cent.

[Greenrookie]

http://www.hellenicshippingnews.com/News...a963d8cb36


Hong Kong: Statistics on vessels, port cargo and containers for the third quarter of 2013

----------

In general, Q3 port numbers are better. I believe is due to bad numbers due to port strikes in q2.

2H, is usually a seasonal stronger, due to season Christmas shopping and year end promotion, lets hope Hph turn in stronger operational results.

[Greenrookie]

http://www.hellenicshippingnews.com/News...1e29f8413b

Ports – a preferred play for investors

--------

There is mentioned of cosco pacific and some other port plays listed in HK. HPhT is in the table of comparison and is the second worst performing, which is unjustifable compare to its HK peers.

[Nick]

http://www.hellenicshippingnews.com/News...1e29f8413b

Ports – a preferred play for investors

--------

There is mentioned of cosco pacific and some other port plays listed in HK. HPhT is in the table of comparison and is the second worst performing, which is unjustifable compare to its HK peers.

But don't it trade at a higher PER than its peers in HK ? That could explain the under-performance.

(Not Vested)

[Dividend Warrior]

Hutchison Port Holdings Trust - Outlook 2014 (UBS)

Rating: Neutral (price target US$0.75)

Outlook 2014
We see a few uncertainties in 2014 on the volume outlook for the following reasons: 1) the formation of P3 by the world's three largest container shipping companies may lead to reduced trans-shipment volume and less bargaining power for ports; 2) Hong Kong's position as the regional trans-shipment hub may be challenged by Shanghai, as the latter benefits from the Free Trade Zone policy; and 3) Yantian faces continuing competition from West Shenzhen ports and Nansha in Guangzhou. Furthermore, 2014 may be further challenged by Yantian's rising effective tax due to the expiry of tax holidays.


Catalysts
A potential catalyst is better-than-expected volume growth at both Hong Kong and Yantian, benefitting from a global trade recovery and hence China's export recovery.

Valuation
We base our 12-month price target of US$0.75 on the dividend discount model, assuming a COE of 8.2%. Despite uncertainties in 2014, we think the current valuation is reasonable at a dividend yield of 6% in 2013E, and hence our Neutral rating.

(Not vested)