- BiPort posted weaker sequential earnings (-20% QoQ) for 3QFY12 at RM31mil. This takes its cumulative 9MFY12 earnings to RM114mil which came below expectations, accounting for 60% and 67% of our and consensus FY12F's estimates. The underperformance was mainly due to high tax credit in the preceding quarter.
- Even so, at the pre-tax level ' to disregard the effect of the taxation charges ' our numbers still came up short as a result of higher-than-expected maintenance costs.
- Having said that, there was also a slight drop in revenue (-2% QoQ) following a major shutdown at the LNG plant and weaker vessel calls ' 22 calls ' in July, although the final two months of the quarter compensated for this shortfall.
- On the flipside, the interim facilities for Samalaju Port ' with an annual handling capacity of four million tonnes ' will be ready for operations by 1QFY13F in time to accommodate the new plants in SCORE that will start operating next year. To recap, this interim port would comprise a ro-ro ramp and two barge berths of 160m in length, each with a depth of 7m.
- 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 annually, if necessary. The management expects the port to be fully operational by 1Q2016.
- There is also further upside from the new LNG train which will take its total capacity to 27.6mtpa. We estimate the additional 3.6mtpa throughput to bring additional RM35mil in revenue ' via berth charges ' and circa RM10mil in pre-tax profit to BiPort. The new train will be expected to operate in 4Q2015.
- We reaffirm our BUY rating on BiPort, with our fair value kept unchanged at RM8.40/share based on our DCF valuation. Nonetheless, we are putting our numbers under review pending a meeting with the management.