BIPORT (5032) : Bintulu Port - Nothing to look forward to in 2015
Target RM6.70 (Target: REDUCE)
At 70% of our full-year forecast, we deem Biport's 9M14 earnings in line as taxes tend to be seasonally lower in 4Q. Pretax profit in 3Q14 was in line, falling 13% yoy as LNG vessel calls dropped 10% yoy. We hence keep our EPS forecasts and DCF-based target price. We maintain our Reduce call, as dividends are at 10-year lows while earnings prospects are capped until Petronas's ninth Bintulu LNG train is completed in 2016. We prefer Westports.
3Q14 and 9M14 results highlights
Biport's 3Q14 net profit fell 21% yoy, a result of the 7% decline in LNG vessel handling revenue as LNG vessel calls dipped 10% yoy. Bulking service revenue grew 13% yoy, likely due to stronger volume and hikes in certain charges. Operating costs were 7% higher yoy, largely arising from higher manpower costs. EBITDA consequently dipped 2% yoy. Although PBT was 13% lower yoy, tax payments grew by 38%, most probably due to several non-deductible tax expenses and the absence of tax incentives. Although Biport's 9M14 net profit only accounted for 70% of our full-year forecast, PBT was in line at 74%. The company's taxes are generally lower in 4Q, so earnings should improve qoq.
Dividend handouts at 10-year low
Biport announced a dividend handout of 6 sen/share for 3Q14, in line with our expectations. FY14's dividend will likely be 20% lower than the payout in FY13 due to ongoing capex obligations for Samalaju Port. We expect Biport's dividends to remain lacklustre until the completion of Samalaju Port in 2016. Dividend yield for the company is hence just 3.4% for FY14-15, a 10-year low.
Nothing exciting in 2015
Earnings growth for Biport will remain tepid in 2015 due to capacity constraints at Petronas's LNG trains in Bintulu. The number of vessel calls at Biport will at best only grow marginally until the completion of Petronas's ninth train in 2016, which will ease capacity shortage concerns. Samalaju Port, which is slated to begin full operations in 2Q16, should however be loss-making in its early years due to (1) start-up costs and (2) Biport's thin margins for container and bulk handling, offsetting some of the profit growth from the completion of the ninth LNG train.
Source: CIMB Daybreak - 28 November 2014
Target RM6.70 (Target: REDUCE)
At 70% of our full-year forecast, we deem Biport's 9M14 earnings in line as taxes tend to be seasonally lower in 4Q. Pretax profit in 3Q14 was in line, falling 13% yoy as LNG vessel calls dropped 10% yoy. We hence keep our EPS forecasts and DCF-based target price. We maintain our Reduce call, as dividends are at 10-year lows while earnings prospects are capped until Petronas's ninth Bintulu LNG train is completed in 2016. We prefer Westports.
3Q14 and 9M14 results highlights
Biport's 3Q14 net profit fell 21% yoy, a result of the 7% decline in LNG vessel handling revenue as LNG vessel calls dipped 10% yoy. Bulking service revenue grew 13% yoy, likely due to stronger volume and hikes in certain charges. Operating costs were 7% higher yoy, largely arising from higher manpower costs. EBITDA consequently dipped 2% yoy. Although PBT was 13% lower yoy, tax payments grew by 38%, most probably due to several non-deductible tax expenses and the absence of tax incentives. Although Biport's 9M14 net profit only accounted for 70% of our full-year forecast, PBT was in line at 74%. The company's taxes are generally lower in 4Q, so earnings should improve qoq.
Dividend handouts at 10-year low
Biport announced a dividend handout of 6 sen/share for 3Q14, in line with our expectations. FY14's dividend will likely be 20% lower than the payout in FY13 due to ongoing capex obligations for Samalaju Port. We expect Biport's dividends to remain lacklustre until the completion of Samalaju Port in 2016. Dividend yield for the company is hence just 3.4% for FY14-15, a 10-year low.
Nothing exciting in 2015
Earnings growth for Biport will remain tepid in 2015 due to capacity constraints at Petronas's LNG trains in Bintulu. The number of vessel calls at Biport will at best only grow marginally until the completion of Petronas's ninth train in 2016, which will ease capacity shortage concerns. Samalaju Port, which is slated to begin full operations in 2Q16, should however be loss-making in its early years due to (1) start-up costs and (2) Biport's thin margins for container and bulk handling, offsetting some of the profit growth from the completion of the ninth LNG train.
Source: CIMB Daybreak - 28 November 2014
