Bintulu Port Holdings - Business as Usual

Bintulu’s 1QFY12 earnings and  revenue came in line within our and consensus estimates. The port operator reported a net profit of RM43.9m on the back of RM131.2m in revenue. Revenue grew by 8% y-o-y on the back of higher contribution from the cargo and container division that was boosted by the higher volume from bulk fertilizer, palm oil  as well as project cargoes for construction activities at Samalaju Industrial Areas. The dividend for 1QFY12 came in at 7.5sen (unchanged y-o-y). We maintain our earnings forecasts with our FV unchanged at RM7.10. Though we like the stock for its stable yield, we maintain NEUTRAL.

In line. Bintulu posted a net profit of RM43.9m on the back of RM131.2m in revenue, which are in line with our and consensus estimates. Revenue grew by 8% y-o-y on the back of higher contribution from the cargo and container division that was boosted by the higher volume from bulk fertilizer, palm oil as well as project cargoes for construction activities at Samalaju Industrial Areas. The weaker q-o-q top-line reflected seasonality  with winter approaching its tail  end in 1Q, which would typically  see demand from LNG tapering off. While its revenue generated were higher y-o-y from the cargo side, we note that LNG revenue may have declined given the higher volume base  for  last  year  arising from the Japanese earthquake, which saw higher shipments of LNG.

Margins inching lower. We note that Bintulu saw its EBITDA margins declining slightly, which could be attributed to higher contribution from the non-LNG side, whose margins are thin. We expect this trend to continue moving forward.

Waiting for Samalaju. Construction work on the RM1.5bn Samalaju Port is expected to commence in Jan 2013. The new port will have some RM300m in port equipment  that provides an initial annual handling capacity of 18m tonnes, which  could be raised to 30m tonnes upon its full development. Management has yet to  conclude its long-drawn-out ongoing discussions  on finalizing Samalaju Port’s operational and ownership structure. Currently, it has yet to finalize the funding for this venture, but our sources indicate possible fund-raising through the debt market. As of now, negotiations to obtain a lower lease rental and a lower berthing tariff hike for its LNG tankers are still pending. 

Dividends. As expected, a single tier dividend of 7.5 sen was proposed for 1Q (unchanged from last year). However, moving forward, the dividend payout will not likely be as high as in previous years as the company needs additional funding in the short term.

Maintain NEUTRAL.  We maintain our earnings forecasts with our FV unchanged at RM7.10. Though we like the stock for its stable yield, we maintain our NEUTRAL stance.

Source: OSK