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.

Source: OSK