BIPORT (5032) - Bintulu Port - Higher taxes, lower profits
Target RM6.50 (Stock Rating: REDUCE)
At 94% of our full-year forecast, Biport's FY14 net profit was below our estimates due to a higher-than-expected effective tax rate. Earnings dipped 9% yoy despite a marginal 2% improvement in PBT following the expiry of tax incentives. We lower our FY15-16 EPS forecasts to account for higher taxes, leading to a lower DCF-based target price. Maintain Reduce, with potential losses from Samalaju Port and unattractive dividends as key de-rating catalysts. We prefer Westports.
Highlights of 4Q14 and 2014
Biport's 4Q14 net profit fell a sharp 31% yoy despite a 9% rise in revenue and a 4% increase in pretax profit. Higher tax rate was the culprit, likely due to the expiry of tax incentives and several non-deductible expenses. Revenue rose 4% yoy in FY14 following a rise in bulking services revenue and LNG-related revenue. LNG vessel calls actually fell 3.7% yoy to 471 calls, suggesting higher LNG handling charges. Pretax profit improved 2% yoy in spite of higher depreciation expenses, thanks to higher revenue and savings in admin costs. However, full-year net profit contracted by 9% yoy due to higher taxes. Biport's effective tax rate rose 9.6%pts to 25.7% in 2014.
Better-than-expected dividends, but nothing to shout about
Aside from the usual 6 sen/quarter interim dividend, Biport also announced a special dividend of 3 sen. The special dividend brings the full-year dividend to 27 sen/share, higher than our 24sen/share estimate. Despite the presence of a special dividend, Biport's full-year dividend still fell 10% short of FY13's payout. Dividend yield is poised to remain low in FY15 due to capex obligations for Samalaju Port.
No catalysts in FY15
Biport will continue to experience slow cargo throughput and vessel call growth in 2015 due to capacity constraints at Petronas's LNG trains in Bintulu. The completion of Petronas's ninth LNG train in 2016 should ease capacity shortage concerns, but Samalaju Port, which is expected to also commence full operations in 2016, may be loss-making in its early years due to start-up costs and low margins for the container, dry bulk and liquid bulk business.
Source: CIMB Daybreak - 17 February 2015
Target RM6.50 (Stock Rating: REDUCE)
At 94% of our full-year forecast, Biport's FY14 net profit was below our estimates due to a higher-than-expected effective tax rate. Earnings dipped 9% yoy despite a marginal 2% improvement in PBT following the expiry of tax incentives. We lower our FY15-16 EPS forecasts to account for higher taxes, leading to a lower DCF-based target price. Maintain Reduce, with potential losses from Samalaju Port and unattractive dividends as key de-rating catalysts. We prefer Westports.
Highlights of 4Q14 and 2014
Biport's 4Q14 net profit fell a sharp 31% yoy despite a 9% rise in revenue and a 4% increase in pretax profit. Higher tax rate was the culprit, likely due to the expiry of tax incentives and several non-deductible expenses. Revenue rose 4% yoy in FY14 following a rise in bulking services revenue and LNG-related revenue. LNG vessel calls actually fell 3.7% yoy to 471 calls, suggesting higher LNG handling charges. Pretax profit improved 2% yoy in spite of higher depreciation expenses, thanks to higher revenue and savings in admin costs. However, full-year net profit contracted by 9% yoy due to higher taxes. Biport's effective tax rate rose 9.6%pts to 25.7% in 2014.
Better-than-expected dividends, but nothing to shout about
Aside from the usual 6 sen/quarter interim dividend, Biport also announced a special dividend of 3 sen. The special dividend brings the full-year dividend to 27 sen/share, higher than our 24sen/share estimate. Despite the presence of a special dividend, Biport's full-year dividend still fell 10% short of FY13's payout. Dividend yield is poised to remain low in FY15 due to capex obligations for Samalaju Port.
No catalysts in FY15
Biport will continue to experience slow cargo throughput and vessel call growth in 2015 due to capacity constraints at Petronas's LNG trains in Bintulu. The completion of Petronas's ninth LNG train in 2016 should ease capacity shortage concerns, but Samalaju Port, which is expected to also commence full operations in 2016, may be loss-making in its early years due to start-up costs and low margins for the container, dry bulk and liquid bulk business.
Source: CIMB Daybreak - 17 February 2015
