KUCHING: New sukuk expenses, increased total amortisation expenses from Samalaju Industrial port and poorer performance from Bintulu Port dragged Bintulu Port Holdings BHd (Bintulu Port) in its first quarter of financial year 2018 (1Q18).
To note, 1Q18 net profit of RM31.2 million was deemed broadly within expectations, coming in at 20 per cent of Kenanga Investment Bank Bhd’s (Kenanga Research) full-year forecast.
Year on yeay (y-o-y), net profit plunged 38 per cent, mainly due to new sukuk expenses of RM12.5 million, coupled with increased total amortisation expenses by 35 per cent – both attributed to Samalaju Industrial Port, which commenced operations in the second half of 2017 (2H17),” Kenanga Research said in a report yesterday.
This was in addition to poorer performance from existing Bintulu Port due to lower liquefied natural gas (LNG) vessel calls.
“Despite so, group operational revenue improved four per cent y-o-y, thanks to new revenue from Samalaju Industrial Port, which offset Bintulu Port’s revenue deterioration of 13 per cent y-o-y.
“Sequentially, net profit also plunged by 29 per cent quarter on quarter (q-o-q), attributed by a higher effective tax rate of 32 per cent versus 17.5 per cent in 4Q17, coupled with the aforementioned weaker performance from Bintulu Port.
“Group operating revenue also dropped 10 per cent y-o-y, in line with Bintulu Port’s revenue deterioration by 13 per cent, offsetting Samalaju Industrial Port’s revenue improvement by 10 per cent.”
Given the weaker LNG volume outlook for the year, Kenanga Research expect the existing Bintulu Port to post weaker earnings in FY18.
“Additionally, FY18 would also see the fullyear impact of losses from Samalaju Industrial Port, which commenced operations in 2H17, dragged by fixed costs such as depreciation and amortisation costs from the RM1.9 billion development, expenses from the RM950m sukuk to fund the development, and RM4.7 million per year land lease included in the concession agreement.
“Nonetheless, we are expecting breakeven for Samalaju Industrial Port in FY20 or beyond, driven by development growth of Samalaju Industrial Park.”
This led Kenanga Research to maintain its market perform call on Bintulu Port, given the lack of any rerating catalysts, while dividend yield remains decent at circa four per cent.
Post-model update, it trimmed its FY18-19E earnings by three to four per cent after fine-tuning its borrowings costs and amortisation assumptions.
“Our target price is lowered to RM5.85, from RM6.10 previously, after rolling forward our valuation base year to FY19.”
Source: Borneo Post Online