Bintulu  Port’s  9M14  earnings  were  in  line  with  our  expectations.   We maintain  our  NEUTRAL  call  with  an  unchanged  DDM-based  TP  of MYR7.21 TP (3.4% upside).  3Q14 saw  softer revenue growth and higher operating  expenses  but  we  believe  earnings  should  pick  up  in  thetraditionally  stronger  4Q.  More  significant  growth  may  be  seen  only when  Samalaju  Port  is  completed.  The  company  declared  an  interim dividend of MYR0.06 for the quarter under review.

Within expectations.  Bintulu Port’s 9M14  earnings of MYR106.2m  met 64% and 67% of our and street estimates  respectively. W e deem  this  in line,  as 4Q  is traditionally a stronger  quarter.  3Q14  revenue  growth was flattish at  +0.6% YoY. Vessel calls  for  liquefied natural gas (LNG) werelower  at  107  vs 3Q13’s  119. Revenue from the bulking services in 3Q14 climbed  12.8% YoY. Meanwhile, 3Q14 operating expenses were higher YoY  at  MYR93.9m  (vs  MYR86.8m  3Q13),  due  to  an  increase  in manpower  expenses,  depreciation  of  property,  plants  and  equipment (PPE)  and amortisation of intangible assets.  These expenses translatedinto a lower EBITDA margin  by  4.1ppts QoQ and 3.3ppts YoY  to  66.5%.Bintulu  Port  declared  an  interim  dividend  of  MYR0.06  for  the  quarter under review. 

Outlook.  Currently,  the  handling  of  LNG  vessel  calls  and  cargoes  will still  be  Bintulu  Port  most  important  revenue  contributor.  More  growth may  be  seen  only  upon  completion  of  the  Samalaju  Port  expected  in1H16.

Risks. A possible delay in the completion of Samalaju Port may give rise to  additional  expenses  and  defer  contributions  to  the  company’s earnings. A higher capex could also hamper Bintulu Port’s ability to pay high dividends. 

Maintain  NEUTRAL.  We  keep  our  earnings  forecasts  unchanged  and maintain our NEUTRAL recommendation. We keep our DDM-based  TPat  MYR7.21,  and expect a  dividend payout of MYR0.24. We expect  this pyout  to  only  increase  in  two  years’  time,  ie  after  Samalaju  Port  is completed, as earnings improve.

Source: RHB