Bintulu  Port’s 1H13  results  were  slightly  below  ours  and  consensus estimates. We lower our earnings forecast for FY13F and FY14F based on the guidance offered by Management. Despite the higher share base, the  company  is  maintaining  its  7.5  sen  dividend  payout,  a  positive surprise. We adjust our DDM based valuation  accordingly and derive a new FV of MYR7.51 (from MYR6.95). Maintain NEUTRAL.  

- Guidance  given.  Bintulu Port’s MYR60.5m  1H13  core  net  earnings  (-25.7%  y-o-y)  made  up  38%/39%  of  our/consensus  full-year  forecasts. Management  guided  that  its  bottomline  is  expected  to  be  lower  despite the stronger revenue due to higher operating expenses. Additionally, the approved  service  project  incentive  (granted  from  2008  to  2012),  has been  fully  claimed.  We  adjust  our  earnings  forecast  accordingly  to MYR144m from MYR157m for FY13 and MYR159m from MYR175m for FY14.  

- Operations  overview.  On  a  q-o-q  basis,  revenue  generated  from  port, liquefied  natural  gas  (LNG)  and  bulking  services  dipped  9.6%,  12.1% and  14.1%  respectively.  The  number  of  vessels  berthing  for  LNG  in 2Q13 slipped to 113 vs 128 in 1Q13, mainly due to seasonality. On top of  that,  Bintulu  Port  also  incurred  higher  costs,  recording  total expenditure of MYR93.3m (+11.4% q-o-q) as a result of the performance merit  payments  for  maintenance  works  on  the  port’s  infrastructure.  The higher expenses have contributed to a 33.7% q-o-q drop in 2Q13’s core net profit to MYR24.1m.  

- Dividend  payout  above  expectations.  Despite  having  a  larger  share base of 460m (from 400m),  Bintulu Port has maintained its DPS payout (7.5 sen in 2Q13), which is a positive surprise.

- Risks.  The  possible  delay  in  the  completion  of  the  Samalaju  Port  may result in additional expenses and delay earnings contribution.  

- Maintain  NEUTRAL.  We  adjust  upward  our  dividend  payout assumptions  in  our  DDM  to  reflect  Bintulu  Port’s  constant  dividend payout  of  7.5  sen  per  quarter.  This  raise  our  FV  to  MYR7.51  (from MYR6.95). 

Source: RHB