Hutchison Port Holdings Trust - DBS Research 2024-08-27: Overlooked Beneficiary Of Upcoming Rate Cuts; FY24 Yield Of 13% Very Attractive

• Hutchison Port Holdings Trust (HPH Trust, SGX:NS8U) is one of two port operators covering both Hong Kong and Shenzhen, and the market leader in both, with long-term operating rights. As current berths are already operating at optimal levels, new capacity of ~3.4mil TEUs from Yantian East Port (effective stake of 39.73% for Hutchison Port Holdings Trust) will come on stream in 2025 or early 2026 to support the Trust’s long-term growth.

Diverging throughput trends continued in July.

• - Read this at SGinvestors.io -
• - Read this at SGinvestors.io -

Robust volume prospectus at Yantian to boost overall throughput growth in FY24.

• Supported by importers continuing to rebuild inventories, the US National Retail Federation (NRF) estimates that US container cargo imports will rise ~10% y-o-y, with 3Q24/4Q24 up 16%/3% y-o-y.
• Given Yantian port handles ~25% of China’s exports to the US, we expect its throughput volume to grow by a solid 11% in 2H24, lifting Hutchison Port Holdings Trust's overall throughput by 4.5% in FY24 (compared to -6.3% in FY23).
• Meanwhile, management expects the decline in Hong Kong's throughput to narrow in 2H24 and stabilise in 2025. Hong Kong’s volume has been positively impacted by the Red Sea disruption, with port congestion in nearby ports such as Singapore leading to additional port calls in Hong Kong since June.

Transitioning HK terminals’ focus to intra-Asia trades in the long term.

• Read more at SGinvestors.io.

Maggie WANG DBS Group Research | Paul YONG CFA DBS Research | https://www.dbs.com/insightsdirect/ 2024-08-27 SGinvestors.io

---