HPH Trust’s Q1 Net Profit Soars amid Govt Refund

The first quarter of 2016 seems to be off to an excellent start for Singapore-listed container port business trust Hutchinson Port Holding Trust (HPH Trust) which saw its net profit surge by 94.2% when compared to last year.

Namely, despite a fall in throughput of its deep-water ports of 8% during the first quarter of this year ending March 31st, the trust’s net profit attributable to unitholders reached HKD 554.9 million (USD 71.6 million), representing HKD 269.1 million jump over last year.

The jump was assigned to rise in other operating expenses following a HKD430m rate refund from the government.

Hongkong International Terminals Limited’s (HIT) throughput dropped by 12.1% year-on-year mainly due to weaker intra-Asia and transshipment cargoes. The trust’s Yantian International Container Terminal’s (YICT) throughput was 1% below last year, amid weaker transshipment and empty cargoes but were partially offset by growth in US and Europe cargoes.

Combined throughput of HIT, COSCOHIT and ACT dropped 13% yoy, the trust’s results show.

“The volume of containers handled by HPH Trust is affected materially by the economic performance of the US and Europe as US economy continues to expand albeit at a rather slow pace,” the company said, adding that it anticipates US economic outlook for 2016 to be stable.

Outbound cargoes to US posted minimal growth in the first quarter of 2016 and the company expects that the full year volume will result in a slight increase.

“Outbound cargoes to Europe showed improvement and displayed a slight upward trend in the first quarter of 2016. However, weak consumer sentiment and high unemployment rate remain a drag on its economic recovery. We expect volume towards Europe will likely to be flat in 2016,” the company added.

Given the soft global trade outlook, management remained cautious on expected cargo volume for 2016.

 “HPH Trust will target improving its core debt metrics over the 5 year period from 2017 to 2021. At the end of this period, HPH Trust expects consolidated debt to consolidated total capital not be greater than 30%,” HPH Trust said.

This entails repaying a minimum of HKD 1 billion of debt annually beginning in 2017.

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