Hutchison Port Holdings Trust (HPHT) has reported earnings of HK$1.10 billion ($185.7 million) for the FY2022 ended Dec 31, 2022, down 37.1% y-o-y.

 

Earnings per unit similarly fell by 37.1% y-o-y to 12.62 HK cents.

 

In its earnings statement, the group said it experienced &ldquo challenging business conditions&rdquo in the 2HFY2022.

 

&ldquo There was a commencement of a significant decline in containers shipped from China to Europe and North America and a decline in China imports. The closed loop Covid-19 control arrangements at Yantian continued to pressure operating costs and cross border restrictions on trucking operations had an adverse effect on shipments through Hong Kong,&rdquo reads the statement.

 

&ldquo Shipping lines have been adjusting services to reflect the changed conditions which have resulted in a reduction in service flexibility for the HPHT ports,&rdquo it adds.

 

Revenue and other income for the FY2022 fell by 8.1% y-o-y to HK$12.17 billion as combined container throughput of HIT, COSCO-HIT and ACT (collectively known as HPHT Kwai Tsing), fell by 11.4% y-o-y mainly due to lower local and transshipment cargoes.

 

HIT refers to Terminals 4, 6, 7 and the two berths in Terminal 9 at Kwai Tsing, Hong Kong. COSCO-HIT refers to Terminal 8 East, also at Kwai Tsing. ACT refers to Terminal 8 West at Kwai Tsing.

 

The lower revenue was also attributable to the lower container throughput of YICT, which fell by 4.2% y-o-y. The decrease is primarily driven by the decrease in the US, EU and transshipment cargoes, but partially offset by higher empties. YICT refers to Yantian International Container Terminals, located at Yantian, Shenzhen in China.

 

The average revenue per twenty-foot equivalent unit (TEU) in Hong Kong was higher y-o-y mainly due to higher storage income. However, this was offset by the lower average revenue per TEU in China. The lower revenue was attributed to lower storage income and depreciation of the renminbi (RMB).

 

Other operating income plunged by 65.0% y-o-y to HK$146.2 million due to lower government subsidies in the year before.

 

Accordingly, operating profit fell by 20.4% y-o-y to HK$4.28 billion.

 

During the year, HPHT saw share of losses after tax of associated companies at HK$81.4 million, 0.1% higher y-o-y.

 

Share of profits less losses after tax of joint ventures fell by 35.3% y-o-y to HK$74.7 million mainly due to the worse performance in the combined results of COSCO-HIT and ACT on the back of lower throughput and higher interest expenses.

 

Profit before tax fell by 24.9% y-o-y to HK$3.60 billion.

 

During the FY2022, HPHT&rsquo s distribution per unit (DPU) stood unchanged at 14.50 HK cents for the full year.

 

Its net asset value (NAV) attributable to unitholders stood at HK$3.08 as at Dec 31, 2022, down 0.96% y-o-y.

 

As at Dec 31, 2022, cash and cash equivalents stood at HK$10.40 billion.

 

Looking ahead, the group is more positive for the FY2023 with the year seeing some &ldquo encouraging developments&rdquo with the relaxation of Covid-19 controls in China and the reopening of borders with Hong Kong.

 

&ldquo Apart from expected gradual improvements in international trade during the year, HPHT will benefit from the elimination of the closed loop arrangements at Yantian and an anticipated return of containers to Hong Kong as cross border trucking recovers,&rdquo says the group.

 

That said, the current decline in international trade and possible recessions in Europe and the US have made it difficult for the group to provide a forecast for its business for the FY2023.

 

&ldquo Management is focused on dealing with the short-term challenges for the business and at the same time managing initiatives for long term success including human resource development, infrastructure improvements and a 5% reduction in emissions at the ports by the end of 2026. Proof-of-concept tests for autonomous electric trucks will commence in 2023 and a program to convert RTGC or rubber tyred gantry crane to electrical power will continue,&rdquo reads the statement released by HPHT.

 

With interest rates expected to rise in 2023, the group says its exposure to interest rate rises has been hedged on about 71% of its long-term debt as at Dec 31, 2022.

 

Key Highlights 

 

&bull 2022 full year throughput of HPH Trust&rsquo s ports was 7% below last year. YICT&rsquo s throughput was 4% below last year. Combined throughput(N1) of HIT, COSCO-HIT and ACT (collectively &ldquo HPHT Kwai Tsing&rdquo ) was 11% lower than last year 

 

&bull Outbound cargoes to the US and EU for 2022 were lower than 2021 volume by 12% and 13%, respectively. YICT&rsquo s full year throughput decrease was mainly attributed to the lower US, EU and transshipment cargoes, but partially offset by higher empties. The drop in HPHT Kwai Tsing&rsquo s throughput was mainly due to lower local and transshipment cargoes 

 

&bull 2022 full year NPAT was HK$2,519.7 million, HK$1,007.5 million or 29% below last year. NPAT attributable to unitholders was HK$1,099.0 million, HK$648.2 million or 37% below last year 

 

&bull 2022 full year Distribution Per Unit is 14.50 HK cents

In its biggest single investment ever, PSA is to purchase a 20% stake in Hutchison Whampoa Ltd (HWL)&rsquo s portfolio of ports - Hutchison Port Holdings Ltd and Hutchison Ports Investments Sà rl - for a total cash consideration of US$4.388B (HK$34B).

OCBC and DBS have maintained their TPs for Hutchison Port Holdings Trust (HPHT) at 26 US cents and 37 US cents respectively.

good to load up since PSA is exploring exit and should be asking a good price since they paid as follow 

PORT operator PSA International, fully owned by Singapore state investor Temasek Holdings, is considering selling its multi-billion dollar, 20 per cent stake in the ports business of CK Hutchison Holdings, two sources familiar with the matter told Reuters.

 

PSA, the world&rsquo s second-biggest container terminal operator, whose global network encompasses 160 locations in 42 countries, had acquired the stake in the Hong Kong-based conglomerate&rsquo s ports business for US$4.4 billion in 2006.

 

PSA was not immediately able to provide comment to a Reuters query. Both Temasek and CK Hutchison, the conglomerate of retired billionaire Li Ka-shing, declined to comment.

 

PSA is in the early stages of evaluating an exit from CK Hutchison&rsquo s ports business and some potential bidders have been tapped, said the sources, who did want to identified due to the sensitivity of the matter.

 

Reuters was not immediately able to ascertain the estimated valuation of PSA&rsquo s stake being offered for sale.

 

The sources said PSA&rsquo s move comes as it reviews its portfolio in the backdrop of muted global shipping activity.

 

One of the sources said he expects port operators, mainly from China, shipping lines and cash-rich global infrastructure funds to be among the potential bidders.

 

CK Hutchison&rsquo s ports division is one of the world&rsquo s largest port operators, but its mainstay Hong Kong business has been facing tough competition from Chinese ports in the last few years.

 

Last month, UN agency Unctad forecast global maritime growth for 2023-2027 at an annual average of 2.1 per cent, down from the previous three-decade average of 3.3 per cent, with slow economic growth and the conflict in Ukraine hurting the outlook.

 

Besides the stake&rsquo s valuation, a successful deal would depend on whether the buyers are acceptable to all parties, one of the sources said, adding that securing regulatory approvals from a number of countries was another key factor.

 

If a deal is reached, it could rank among the biggest selldowns by a Temasek entity. Temasek reported a nearly 6 per cent rise in its portfolio value to a record S$403 billion in the year to March 2022.

 

Temasek executives had said in June that the sovereign investor expects to slow down its investments due to the deteriorating global economy. Economic conditions have worsened since then, with global markets selling off along with a sharp increase in interest rates.