HPH Trust Q3 earnings dip due to higher taxation

HUTCHISON Port Holdings Trust (HPH Trust) on Friday posted a 2.9 per cent drop in profit attributable to unitholders to HK$232.5 million (S$40.4 million) for its third quarter ended Sept 30 due to higher taxation.

Revenue and other income for the quarter held steady at HK$3.03 billion, due to a comparable combined container throughput of its container terminals to the year-ago quarter.

The average revenue per twenty-foot equivalent unit (TEU) for Hong Kong was below last year, mainly due to the increased transshipment mix, but for China, the average revenue per TEU was above last year, largely due to the favourable shipping line mix, the trust said.

That said, taxation at HK$154.8 million was 21 per cent above last year, mainly due to higher profit and the increase of tax rates upon the expiries of the "High and New Technology Enterprise" status of Yantian International Container Terminals (YICT) Phase I & II, and the tax-exemption period for one of the berths at YICT's West Port Phase II at the year-end of 2018.

"Despite the outbound cargoes to the US (continuing) to decline in the third quarter of 2019 by 8 per cent, the outbound cargoes to the European Union grew by 6 per cent when compared to last year.

"YICT's throughput growth in the first nine months of 2019 was mainly attributed to the growth in empty and transshipment cargoes, but partially offset by the decrease in US cargoes. The drop in HPH Trust Kwai Tsing's throughput was mainly due to the decrease in intra-Asia and transshipment cargoes," it said.

The trust derives some 68 per cent of its revenue from China, and the remainder from Hong Kong.

In Hong Kong, HPH Trust operates Hongkong International Terminals, Cosco-HIT Terminals and Asia Container Terminals. In mainland China, HPH Trust operates YICT and Huizhou International Container Terminals.

Looking ahead, the trust expects global trade to be sluggish on the back of intensifying trade tensions, slowing manufacturing and business activities, and elevated geopolitical and economic risks and uncertainties.

"While the bilateral trade talk between the US and China resumed, it is not expected that the trade dispute can be fully resolved shortly and will continue to weigh on HPH Trust's performance.

"Given the uncertainties in the global trade outlook, HPH Trust management remains cautious about future cargo trends and will continue to adhere to cost discipline and efficiency improvements in order to face the challenges ahead," it said.

It also believes that the continued deployment of mega vessels will necessitate investment in port facilities and continuous process improvements by deepwater port operators.

Units of HPH Trust closed one US cent lower at US$0.157 on Friday.