Journey to Wealth
Bintulu Port - No surprise to earnings BUY
- Bintulu Port reported a net income of RM43.8mil (+8% YoY) for 1QFY12 on the back of an 8% growth in revenue. This is largely in-line with our and consensus' expectations ' covering 23% and 26% of our estimates.
- However, earnings slid by 27% QoQ mostly due to a tax incentive of RM16mil in the preceding quarter ' relating to investment allowance with respect to capex incurred from 2008 to 2012 ' and partly due to a weaker contribution from its bulking business.
- However we expect contributions from its bulking services to improve in the coming quarters, as a new refinery ' owned by Sarawak Oil Palms Bhd ' will be operational soon.
- Having said that, LNG-related port charges will continue to be the key driver to BiPort's earnings, accounting for about 60% to 70%. This will be enhanced by an additional LNG train with a capacity of 3.6mtpa ' to be built by Petronas. We understand it is currently at the 'final investment decision' stage.
- We estimate the additional 3.6mtpa throughput will bring in additional RM35mil revenue ' via berth charges ' and about RM10mil in pre-tax profit to BiPort. However, we are keeping our estimates at this juncture as the new LNG train would only start operations in 4Q2015, which is beyond our forecast horizon.
- There will be an additional throughput to Bintulu Port in the medium term ' we estimate a 21% YoY growth for FY12F in dry bulk revenue ' as it will be used to cater to the logistic needs of the heavy industries within SCORE temporarily.
- To cost RM1.8bil, the new port will be able to handle 18 million tonnes of cargo per year and this could be raised to 30 million tonnes a year, if necessary. The interim facilities will be ready for operations in the 1QFY13F in time to accommodate the new plants in SCORE that will start operating next year.
- We maintain our BUY recommendation on Bintulu Port Holdings (BiPort) with our fair value unchanged at RM8.40/share. Apart from the near term upside from higher throughput from SCORE, the stock gives a decent yield of 5%, supported by the stable LNG business.
Source: AmeSecurities
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
