HPH Trust’s H1 earnings fall on lower cargo volume passing through Hong Kong

HUTCHISON Port Holdings Trust’s : NS8U 0% (HPH Trust) H1 profits declined due to lower volumes of export/import cargoes handled in Hong Kong, which further impacted Hong Kong’s attractiveness as a transhipment hub.

In a bourse filing on Tuesday (Jul 26), HPH Trust reported a 6.8 per cent dip in profit attributable to unitholders of the trust to HK$716.3 million (S$126.5 million) in H1 2022 ended Jun 30, from HK$768.3 million a year ago.

The earnings per unit attributable to unitholders also fell 6.8 per cent from HK$0.0882 to HK$0.0822 in the first half of this year.

This is despite an 8 per cent gain in its H1 revenue of HK$6.5 billion, from about HK$6 billion in the same period last year.

Though no forecast statement for the financial year of 2022 has been disclosed, the trust said that a decline in the volume of export/import cargoes handled in Hong Kong had put pressure on profitability.

As the flexibility in service rotation reduces, shipping lines were also less inclined to turn to Hong Kong as a hub for transhipment services, the trust’s manager said in its bourse filing.

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To make matters worse, port congestion problems globally, as well as unstable vessel schedules also led to a sustained high level of skipped port calls in Q2, although HPH Trust noted some decrease as compared with Q1 2022.

The average revenue per twenty-foot equivalent unit (TEU) for Hong Kong and China were above last year, which HPH Trust attributed to higher storage income.

Business performance for the trust — which has controlling interests in container port assets Kwai Tsing, Hong Kong and Yantian Port, Shenzhen, China — was also affected by significant disruptions in global marine shipping schedules as Shanghai, one of the largest ports in the world, went through a lockdown from April.

Cost of services rendered was reported gaining 11.7 per cent above last year from higher direct charges due to high yard density and increase in external contractors’ cost, higher fuel and electricity price, renminbi appreciation and additional Covid-19 precaution costs.

HPH Trust’s manager further foresees a dampened demand in orders from purchasing managers in the West, arising from the high inflationary environment.

For the half-year ended Jun 30, HPH Trust has recommended a distribution rate of HK$0.065 per unit, the same as compared to its H1 distribution rate a year before.

The distribution is expected to be paid out on Sep 23 after the record date on Aug 3.

Units of HPH Trust traded 2 per cent or US$0.005 higher at US$0.245 as at 1.17 pm on Tuesday.