- We maintain HOLD on Bintulu Port (BiPort) with a lower tweaked fair value of RM7.16/share (vs. RM7.36/share previously), which implies a PE of 21x FY15F EPS of 33.5 sen.

- BiPort posted a 2QFY15 net profit of RM20.8mil (-41% QoQ, -32% YoY) – bringing the 1H total to RM56.3mil (-20% YoY) and accounting for 34%-36% of our and consensus estimates.

- We have revised our FY15F earnings downwards by 6%. The lower earnings in 1H were mainly due to higher-thanexpected depreciation/amortisation expenses and payment of “performance merit”.

- For 2Q15, BiPort said expenditure at RM105.56mil was higher by RM8.6mil vs. RM96.95mil in 2Q14 mainly due to the amortisation of lease concession assets and depreciation expenses recognised for assets capitalised since 2H14.

- We had factored in higher expenses from FY16F, due to the start-up costs at the interim facilities of Samalaju Port.

- Lower LNG and break bulk cargo volumes contributed to the decline in revenue. Note that the effective tax for 1HFY15 was at 26.9% vs. our projected rate of 24%. Operating items were largely in line, with EBITDA accounting for 44% of our projected figure.

- BiPort declared a 2nd interim dividend of 4 sen/share, which brings the total YTD to 10 sen/share (payout ratio at 81.7%) – representing a yield of 1.5%. We maintain our full-year forecast of a 27.2 sen/share payout for FY15F, for now.

- The company said although dry bulk cargoes were increasing, the market is expected to be challenging this year due to the softness in LNG cargo, containerised cargo and timber-based products.

- For FY15F, BiPort said that the handling of LNG vessel calls and cargoes will still be Bintulu Port’s most important revenue contributor, while the bulking operations are also expected to contribute positively towards revenue growth, along with other cargoes such as alumina, containers and palm oil.

- Maintain HOLD.

Source: AmeSecurities Research - 26 Aug 2015