Value or Value TRAP?????
The unit price of this business trust is so low you might as well paint a target on it
By Gwyneth Yeo / theedgemarkets.com.sg | December 8, 2016 : 6:14 PM MYT
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SINGAPORE (Dec 8): DBS Group Research is maintaining its “buy” recommendation for Hutchison Port Holdings Trust (HPHT), even as the trust’s unit price fell to historic lows.
In a Thursday note, DBS analyst Paul Yong said the stock appears to be “oversold at the current price level” trading at 0.6 times its book value and offering a yield of over 8% for FY17.
In fact, Yong believes the group could be “attractive as an acquisition target given its strategic assets” at these levels, and added that HPHT’s major shareholder CK Hutchison is “no stranger to privatisations”.
Aside from that speculation, Yong thinks the group needs to look out for acquisitions to improve its distributions in the longer term, as DPUs have an impact on its share price valuation.
HPHT’s latest acquisition was a 50% equity stake in Zhuhai International Container Terminals in 2015. Prior to that, the trust acquired Asia Container Terminals in 2013, but sold down part of its stake for the Zhuhai acquisition.
The brokerage cut HPHT’s earnings forecast by 4% to 2.16 US cents per share (3.1 cents per share) amid the challenging environment in global trade, and lowered its DPU forecast from 30 HK cents (5.5 cents) to 27 HK cents. Its target price of 48 cents offers a 20% upside from current levels.
Units in HPHT closed unchanged at 59.5 cents on Thursday.
