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Yong maintains “buy” on the Trust with a raised target price of 32 US cents from 27 US cents.
See: Hutchison Port Holdings Trust to pay higher final distribution of 7.7 HK cents
“That said, the majority of the improvements seen in FY2020 should be sustainable as they stem from greater cost efficiencies as well as lower finance costs, especially with interest rates expected to remain low in FY2021.” Yong projects throughput volume growth of 3% for Yantian in FY2201F given the still strong export volumes in China expected for the first half of 2021. “However, this could be tempered going into the second half given the high-base effect from 2H2020 while assuming 1% throughput growth for Hong Kong.” This should help to offset the lower government subsidies and support that were extended to the Trust in 2020 and we project earnings to be flat from FY20-FY21F, he notes. “There could be upside to our forecasts if the Trust is able to push through some rate increases given the current buoyant container freight market.” As at 10.38am, units in HPHT are trading at 0.5 US cents higher, or 2.08% up, at 24.5 US cents.