Hutchison Port Holdings Trust’s Latest Earnings: Distributions Cut By 32%

Yesterday, Hutchison Port Holdings Trust (SGX: NS8U) released its 2017 second quarter earnings report. The reporting period was from 1 April 2017 to 30 June 2017.

As a quick background, the business trust is a port operator and it has stakes in four deep-water container ports in Hong Kong and Shenzhen. This includes Hong International Terminal (HIT), COSCO-HIT Terminals (CHT) and Asia Container Terminals (ACT) in Hong Kong and Yantian International Container Terminal (YICT) in Shenzhen, China.

You can learn more about the business trust in here and here.

Financial highlights

The following’s a quick rundown on some of the latest financial figures for Hutchison Port Holdings Trust:

1. Revenue for the reporting quarter was HK$2.89 billion, a 1.5% decline compared to the same quarter last year.

2. For the second quarter, profit attributable to unitholders was HK$269.1 million, down 21.5% from the HK$342.7 million recorded in last year’s second quarter.

3. Earnings per unit for the second quarter came in at 3.09 HK cents, down 21.5% from the 3.93 HK cents per unit in the second quarter of 2016.

4. Cash flow from operations was HK$1.40 billion and capital expenditure was HK$191.6 million. The lower capex gave the port operator HK$1.2 billion in free cash flow, up from the free cash flow of HK$607.8 million seen a year ago (HK$1.42 billion in cash flow from operations and HK$809.2 million in capex).

5. As of 30 June 2017, Hutchison Port Holdings Trust had HK$7.54 billion in cash and equivalents and borrowings of HK$33.3 billion. This compares with the HK$7.22 billion in cash and equivalents and borrowings of about K$33.8 billion that the business trust had on the same date last year.

In all, Hutchinson Port Holdings Trust’s revenue didn’t change by much, but its profit declined by over 20% from a year ago. The business trust recommended a distribution per unit of 9.50 HK cents, a big 32% decline from the 14.00 HK cents paid out a year ago.

A future outlook

In Hutchison Port Holdings Trust’s earnings release, its management team shared the outlook for the business trust, which was mixed:

“Riding on the back of solid economic activity and strengthening labour market in the US, outbound cargoes to the US extended its growth to the second quarter of 2017.

However, prolonged uncertainties surrounding policy and political development in the US present downside risks to the overall global and US economic growth in 2017.

The European economy continues to show improvements which supported the uplift of outbound cargoes to Europe in the second quarter of 2017. Although the labour market and consumer sentiment have picked up, their sustainability will be the key for Europe’s economic recovery.

In addition to the economic performances of the US and Europe, HPH Trust’s performance is also impacted by the outcomes of the structural consolidation within the container shipping industry and the consequent rationalisation of services.”

Hutchison Port Holdings closed at a unit price of US$0.48 yesterday. At that price, the trust offers a trailing distribution yield of 7%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.