Hutchison Port Holdings Trust expects to continue growing its business in the near to medium term, thanks to the combination of rising ecommerce export volumes from China and Hong Kong, and also growing volume of import cargoes.
Regulatory approval allowing its terminals to eke out better efficiency by working with other Hong Kong port terminal operators will help as well. “All of the above will allow HPHT to continue to grow its business in the next five years,” says the trust’s manager in response to unit holders’ questions sent ahead its AGM on April 19.
HPHT says it has been exploring ways to improve operating profit, which should be reflected in ROI and eventually in distribution per unit.
This upcoming HPHT AGM is probably one where the trust is able to report somewhat positive news to its unit holders, especially those who had held on to the units since its IPO back in March 2011 at US$1.01 per unit. It never traded above that level and went to as low as 9 US cents last March before recovering somewhat in the later half last year to close at 24 US cents on Friday, April 16.
For the year ended Dec 30 2020, HPHT reported a distribution of 12 HK cents, exceeding its original guidance of 8 to 11 HK cents. For FY2019, it paid 11 HK cents. “In the years ahead, HPH Trust is expected to continue to improve its operating results, and strive for stable and sustainable distributions to unitholders,” says HPHT.
SEE:Hutchison Port Holdings Trust has 'huge room' to raise dividends: DBS
The pandemic caused an initial hiccup, but trade volume recovered due to the shift in ecommerce cargoes from air to sea. Demand for personal protective equipment and home upgrading consumption helped drive a “significant” upturn in volume in the second half last year. Its Shenzhen-based Yantian International Container Terminals handled 40% more in volume, and its Hong Kong operations in Kwai Tsing managed 4% more.
The momentum has continued into the first quarter this year. “Total throughput in the first quarter of 2021 had surpassed pre-pandemic level in 2019 by more than 10%,” says HPHT.
On Feb 8, HPHT reported that revenue for the year ended Dec 2020 was down 3.7% y-o-y to HK$10.7 billion. However, it was able to report earnings attributable to unitholders of HK$831.4 million, up 57% y-o-y, as it had to bear lower financing costs and enjoyed better efficiency.
Under a five-year plan that started in FY2017, HPHT trimmed distribution so that to pare debt. It has been doing so at HK$1 billion a year. As at Dec 31 2020, it had a total debt of HK$29.4 billion, which translates into a net-debt-to-equity ratio was 48%, and net-debt-to-Ebitda of 3.1 times.
HPHT plans to continue with this pace of repayment after 2021. “Debt repayment is one of the means which increases the value of equity. At the same time, HPHT will strive to maintain sustainable distributions to unitholders,” it says.
