Look at HPH Trust’s latest quarter

JC Project Freedom HPH Trust USD

The throughput of HPH Trust’s ports was 7% below last year. The combined throughput of HIT, COSCO-HIT, and ACT (HPHT Kwai Tsing) was 11% lower than last year. Outbound cargoes of the US and EU for 2022 were lower than 2021 volume by 12% and 13% respectively. YICT’s full-year throughput decrease was due to lower US, EU, and transshipment cargoes. HPHT Kwai Tsing’s throughput was due to lower local and transshipment cargoes.

Business Outlook

In the second half of 2022, HPH Trust experienced a challenging business environment. There was a decline in containers shipped from China to Europe and North America. There was a decline in China’s imports. The COVID-19 control measures at Yantian increase operating costs. Cross-border restrictions on trucking operations had an adverse effect on shipments through Hong Kong. Shipping lines have adjusted their services which resulted in a reduction in services in HPH Trust ports.

2023 has seen improvements as the Chinese Government has relaxed its COVID-19 controls and the border with Hong Kong has reopened. HPH Trust will benefit from the elimination of the closed-loop arrangements at Yantian and the return of containers to Hong Kong as cross-border trucking has recovered. This is like the relationship between Johor and Singapore. When the cross border opened, the trucks returned between borders.

Management needs to juggle between short-term business challenges, infrastructure improvements, and reduction in emissions at the ports by end of 2026. Autonomous electric trucks will be rolled out as proof of concept test in 2023 and converting RTGCs (transtainer is a wheeled mobile gantry crane) to electric-powered will resume.

Throughput Volume (TEU in thousand)

HPH Trust results presentation 7th February 2023

Looking at the above, the year 2022 throughput volume is the lowest during the last 3 years of Covid-19. The revenue has reduced by 8% in FY2022 to HKD 12,166 million compared to FY2021 which has HKD 13,244 million. The total CAPEX increased by 120% from HKD 232 million in FY2021 to HKD 511 million in FY2022. Profit after tax for FY2022 is HKD 2,519.7 million which is 29% lower than FY2021 HKD 3,527.2 million. HPH Trust’s profits declined because of lower revenue and higher operating expenses. It is not recession resilient and constantly faces higher operating expenses.

The trust issued a DPU of HKD 0.08, payment date on 24th March 2023. Total DPU for FY2022 is HKD 0.145 which is around 9% yield based on the last share price of USD 0.2/share. Net cash from operating activities is HKD 5,849 million which is able to cover the total dividends to non-controlling interest and unitholders which is HKD 3,270 million.

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