During our visit to Bintulu Port’s Samalaju Port development, we learnt that  construction  progress  there  is  on  track  to  meet  the  new  2Q16 deadline.  The  interim  phase  commenced  operation  in  April  and  its completion will be a new growth phase for the company. 1Q14 earnings were in line but dividend was lower. We believe this is due to the need to conserve cash for capex. Maintain NEUTRAL and MYR7.21 FV. 
 
Visit  to  Bintulu  and  Samalaju  ports. We  visited  Bintulu  Port  and  also Samalaju  Port  during  our  Sarawak  Corridor  of  Renewable  Energy (SCORE) visit. We make  no changes  to our  view  on  the  company.  The progress  of  construction  on  Samalaju  Port  is on track to meet 2Q16’s Phase  1  completion.  This  is  barring  unforeseen  circumstances  like  bad weather,  which  may  delay  the  progress.  The  interim  phase,  with  two barge  berths  and  a  roll-on/roll-off  (RoRo)  ramp,  commenced  operation on  21  April.  Upon  Phase  1’s  completion,  there  will  be  three  new Panamax  berths  and  one  barge  berth,  as  well  as  14m  tonnes  of additional  capacity.  By  then,  Samalaju  Port  would  be  able  to accommodate  a  combined  capacity  of  18m  tonnes.  While  the  port  is operating  currently,  its  contribution  to  earnings  is  very  minimal  at  this juncture.  We  believe  Samalaju  Port’s completion  will  be  a  new  growth phase for Bintulu Port.

Briefly  on  latest  earnings.  Bintulu Port’s 1Q14 earnings of MYR41m were  within  our  and  street  estimates.  Revenue  dipped  4.2%  y-o-y  on  a lower  number  of  vessel  calls  for  liquefied  natural  gas  (LNG),  ie  120  vs 1Q13’s 128, and 4Q13’s 129. Other cargoes that contributed positively to revenue  were  palm  oil,  alumina  and  containers.  Meanwhile,  1Q14 operating  expenses  declined  MYR600,000  y-o-y  on  lower  manpower expenses  and  administration  costs,  and  the  depreciation  of  property, plant  and  equipment.  Bintulu  Port  decreased  its  dividend  payout  to  6.0 sen  for  the  quarter  under  review  vs 1Q13’s  7.5  sen.  We  believe  the company  is  preserving  cash  for  future  capex,  which  could  be  mainly allocated to the construction of Samalaju Port.

Maintain  NEUTRAL.  We  keep  our  earnings  forecasts  for  Bintulu  Port unchanged  and  maintain  our  NEUTRAL  call.  The  dividend  discounted model-based MYR7.21 FV also remains unchanged.

Financial Exhibits

Company Profile

Bintulu Port is a world-class LNG port which also operates as a multi-purpose port.

Source: RHB