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SINGAPORE (Nov 22): OCBC is maintaining its “hold” call on Hutchison Port Holdings Trust (HPH Trust) with an unchanged fair value estimate of 42 US cents (57 cents) while recommending investors enter the stock at 39 US cents and below.

In a Wednesday report, lead analyst Deborah Ong says she does not find the trust’s current unit prices particularly attractive, and instead sees a much clearer value proposition at the recommended price of 39 US cents and below.

“Those tracking industry data may be concerned with the 0.9% y-o-y decline recorded in industry-wide HK Kwai Tsing container throughput for Oct. We believe this figure is skewed by the data from Modern Terminals, and keep the positive throughput growth assumption we have for HPHT’s HK ports in FY17. For 10M17, HK Kwai Tsing container throughput remains up by +8.9% y-o-y,” says Ong.

The analyst also notes that HPHT’s unit price has moderated downwards slightly from 43.5 US cents since its last report to the fair value of 42 US cents as of the close of Tuesday.

Ong forecasts for HPHT’s unit price to reach 21 HK cents in FY17F and 22.5 HK cents in FY18F, representing 6.4% and 6.9% yield, respectively. These projections exceed that of Bloomberg consensus DPU forecasts, which stand at 20.6 cents for FY17F and 21.3 HK cents for FY18F.

“With much of the impact from the new shipping alliances already expressed this year through average selling price (ASP) weakness, we do see it as probable that HPHT will not see another round of such steep distribution per unit (DPU) declines next year, relative to what has been seen in years to date,” she adds.

As at 10.23am, units of HPHT are trading 42 US cents, giving it a dividend yield of 14% based on FY18 forecast DPU.