· We maintain HOLD on Bintulu Port (BiPort) with an unchanged fair value of RM7.16/share, which implies a PE of 23x FY15F EPS of 33.5 sen.

· BiPort’s proposed tariff restructuring, including a 30% hike for non-LNG cargoes at Bintulu Port and a reduction of LNG-tariffs, may not likely be implemented by early next year, as we have anticipated.

· The group is still awaiting the authorities’ decision on the matter. We maintain our forecasts for now, pending a clearer picture of the tariff restructuring. The risk bias on our fair value is on the downside. We believe the current share price has priced in the potential delays.

· BiPort is asking for tariff hikes of 20%-30% in containerised and general cargo handling for Bintulu Port. The tariffs for the new port, Samalaju Port, have also yet to be finalised. Simultaneously, LNG-tariffs will be reduced.

· Samalaju Port, which can handle 18mil tonnes of cargo, was originally scheduled for completion by next year, but the latest media report suggests that completion has been delayed to 3Q17.

· Furthermore, our assumption of an additional 2.5mil tonnes of LNG in FY16F may not be achieved given that the new Train 9 at the Bintulu MLNG complex is likely only to be completed by 3Q16, instead of early 2016. The jetty has yet to be constructed. Train 9 will bring in an additional 3.6mil tonnes of LNG, annually.

· On a positive note, BiPort has already succeeding in getting a RM300mil reduction in land lease rentals at Bintulu Port over the original concession period to 2022.

· It has also earlier been granted an approval in-principle from the federal government to extend the concession period for Bintulu Port to 2052 from 2022. This means asset depreciation could be stretched over a long period. · Our current numbers reflect a reduction in LNG tariff rates that would be more than offset by increases in the non-LNG cargo rates and the reduction in lease rentals.

· By FY16F, we have assumed an at least 15% decline in LNG tariff, but mitigated by a 43% rise in non-LNG tariffs vs. FY13 numbers. We maintain that for now.

· Maintain HOLD, for a dividend yield of ~4%, pending clarity on the implementation of the tariff restructuring.

Source: AmeSecurities Research - 9 Oct 2015