Bintulu Port - No surprise to earnings BUY

- Bintulu Port reported a net income of RM43.8mil (+8% YoY) for 1QFY12 on the back of an 8% growth in revenue. This is largely in-line with  our and consensus’ expectations – covering 23% and 26% of our estimates.

- However, earnings slid by 27% QoQ mostly due to a tax incentive of RM16mil in the preceding quarter – relating to investment allowance with respect to capex incurred from 2008 to 2012 – and partly due to a weaker contribution from its bulking business. 

- However we expect contributions from its bulking services to improve in the coming quarters, as a new refinery – owned by Sarawak Oil Palms Bhd – will be operational soon.

- Having said that, LNG-related port charges will continue to be the key driver to BiPort’s earnings, accounting for about 60% to 70%. This will be enhanced by an additional LNG train with a capacity of 3.6mtpa – to be built by Petronas. We understand it is currently at the ‘final investment decision’ stage.

- We estimate the additional 3.6mtpa throughput will bring in additional RM35mil revenue – via berth charges – and about RM10mil in pre-tax profit to BiPort. However, we are keeping our estimates at this juncture as the new LNG train would only start operations in 4Q2015, which is beyond our forecast horizon.

- There will be an additional throughput to Bintulu Port in the medium term – we estimate a 21% YoY growth for FY12F in dry bulk revenue – as it will be used to cater to the logistic needs of the heavy industries within SCORE temporarily. 

- To cost RM1.8bil, the new port will be able to handle 18 million tonnes of cargo per year and this could be raised to 30 million tonnes a year, if necessary. The interim facilities will be ready for operations in the 1QFY13F in time to accommodate the new plants in SCORE that will start operating next year.

- We maintain our BUY recommendation on Bintulu Port Holdings (BiPort) with our fair value unchanged at RM8.40/share. Apart from the near term upside from higher throughput from SCORE, the stock gives a decent yield of 5%, supported by the stable LNG business.  

Source: AmeSecurities