Bintulu Port's FY12 results were in line with our forecasts amid a strong 4Q recovery. 4Q revenue climbed 14% q-o-q, driven by a recovery in LNG calls, following sluggish numbers in 3Q caused by a major shutdown of its LNG plant. However, rising operating expenses eroded earnings margin. Although uncertainties relating to the negotiation of the tariff rates and concession for Samalaju linger, we remain positive on Bintulu's outlook. Maintain NEUTRAL, with an unchanged RM7.10 FV, based on a 7.5% required return.
Well within estimates. Bintulu Port's full-year FY12 net profit of RM146.4m (excluding tax credit RM132.1m) came in line with our forecasts. As expected, the 4Q was a stronger quarter due to rising LNG demand and increasing shipments of goods and construction materials to Samalaju. The group's 4Q revenue climbed 14% y-o-y and 9% q-o-q on higher contribution from the LNG segment, with its vessel calls surging by 22% to 123 calls, versus 101 calls in 3QFY12. The q-o-q improvement was partly due to the low base in 3Q, which was the result of a major shutdown of its LNG plant in July this year. Meanwhile, 4QFY12 revenue from bulking services division rose RM1.1m to RM9.8m, from RM8.7m in 3QFY12.
Operation expenses on the rise. The rising operational expenses - mainly from maintenance work in port infrastructure, vessels docking and maintenance, fuel expenses and administrative expenditure - depressed the group's earnings margin, leading to a decline in its FY12 core PBT margin to 35.0% from 37.5% in FY11.
Maintain NEUTRAL, with RM7.10 FV. Although we still like Bintulu Port's future prospects, there are still uncertainties associated with its tariff negotiation and the concession agreement for Samalaju Port. Hence, we are keeping our NEUTRAL recommendation with our FV unchanged at RM7.10, based on DDM at a 7.5% required return.
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