We expect Hutchison Port Holdings Trust’s (HPHT) upcoming 3Q results to be relatively weak. Industry data shows throughput for Kwai Tsing Container Terminals falling 8.1%, 3.9% and 16.6% YoY for Jul, Aug and Sep respectively. Cumulatively, 3Q18 Kwai Tsing throughput is down 9.6% YoY while 9M18 throughput is down 5.6% YoY.

Meanwhile, industry data for Shenzhen container throughput showed a -3.0%, +2.3%, -6.9% YoY growth for Jul, Aug, and Sep respectively. Cumulatively, 3Q18 Shenzhen throughput grew -2.6% YoY while 9M18 throughput is flat with -0.5% growth.

We note that soft 3Q results may add to poor sentiment in the near-term. That said, HPHT is currently trading at a 0.43x forward P/B (Bloomberg consensus) or more than 2 standard deviations below its average since listing in 2011.

Pending further details from the upcoming results release, we maintain BUY with a US$0.36 fair value.

Source: OCBC Research - 24 Oct 2018