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Debt repayment led to falling trend of DPU: HPHT
HUTCHISON Port Holdings Trust (HPHT) on Sunday said the declining trend of its distributions to unitholders was due to the repayment of debt, amid the "extremely challenging" global and macroeconomic events.
In response to the Securities Investors Association (Singapore)'s question on HPHT's long-term performance amid falling DPU and unit price, the container port business trust listed in Singapore said it has in place a prudent financial policy to manage debt level and finance costs.
The group, which has assets in Hong Kong and China, had embarked on a debt repayment programme to repay HK$1 billion per annum since 2017. But in light of current uncertainties, it has taken a "more prudent" approach and repaid HK$250 million of its debt. This resulted in a fall in the DPU.
HPHT had faced "extremely challenging" events in 2019. This was made worse in the past few months of 2020 with the US-China trade conflict, the Covid-19 pandemic, geopolitical turmoil, as well as the civil unrest in Hong Kong.
The group had earlier trimmed its fourth-quarter distribution per unit (DPU) to five HK cents (0.89 Singapore cent), from 8.48 HK cents before. The DPU for the three months to Dec 31, 2019 lowers the full-year payout by 35.3 per cent to 11 HK cents, compared with 17 HK cents previously.
HPHT's manager noted that distribution is a reflection of the available cashflow from HPHT's operations. Its distribution policy - unchanged since its listing on the Singapore Exchange in 2011 - is to distribute 100 per cent of its distributable income to its unitholders.
The group intends to focus on operational efficiency and cost management to increase the competitiveness of its ports and generate value for its unitholders, said its manager.
One of the key initiatives was the formation of the Hong Kong Seaport Alliance (HKSPA) with, among others, Modern Terminals Limited, a key terminal operator in Hong Kong.
Taking into account the changing dynamics of the shipping industry - in particular with the formation of strategic alliances among shipping lines and the growing use by lines of larger vessels - the manager noted that the HKSPA will enable better utilisation of the existing capacity of HPHT's berths by increasing the flexibility in the overall berth and yard planning among the 23 berths in the Kwai Tsing ports, so as to better accommodate the need of the shipping alliances.
"This will improve the service standard for customers, thereby increasing the overall competitiveness of the berths," said the manager.