Journey to Wealth
Bintulu Port Holdings - 3Q12 slightly below expectations
Period 3Q12/9M12
Actual vs. Expectations The 9M12 core net profit of RM102.0m (excluding a RM12m tax credit) was slightly below expectations, accounting for 68.4% of our full-year net profit estimate (RM149.2m) and 60.6% of the consensus' estimate (RM168.3m).
Dividends As expected, a third interim DPS of 7.5 sen was declared in 3QFY12.
Key Results Highlights QoQ, the revenue was lower marginally by 0.1% due to a shutdown at the LNG plant in July that caused some mild delays to vessel calls. However, the net profit was up by 16.1% due to lower expenses incurred in the quarter. Overall, the results were within our expectations as 3Q is seasonally a stronger quarter for BIPORT.
YoY, the 3Q12 net profit was down by 19.9% mainly due to higher additional expenses for: 1) third party cargo handling services; and 2) maintenance expenses and charter hire of new tugboats. In addition, due to the new accounting standard, BIPORT recorded a higher amortisation charges and finance cost for the quarter, which further pushed the earnings lower.
Outlook The catalysts for BIPORT's earnings are: 1) higher tariff for cargo handling when the Samalaju Industrial Port kick-starts (expected the initial phase by 2H13); and 2) higher LNG vessel calls and port services when the ninth LNG train for MLNG is completed by 2016.
Change to Forecasts Given that FY12 earnings were slightly below expectations, we are trimming our earnings estimates by 5.1%. We are, however, maintaining our FY13 and FY14 estimates as we expect its higher-than-average expenses in FY12 to normalise going forward.
Rating MAINTAIN MARKET PERFORM
Valuation Our target price has been revised slightly lower to RM7.18 (from RM7.20 previously) based on a DCF valuation (WACC: 9.6%). However, given the minimal change, we are maintaining our call.
Risks (i) Lower than expected port and bulking division activities and (ii) a higher than expected CAPEX for the Samalaju port, which could interrupt BIPORT's steady cashflows.
Source: Kenanga
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