Bintulu Ports Holdings Bhd
(June 1, untraded)
Maintain outperform with a target price of RM8.08: Bintulu Port’s net profit of RM35.5 million (down 13.5%) for the first quarter  ended March (1QFY15) was within expectation, making up 22.3% of our full-year forecast. A dividend per share of six sen (1QFY14: six sen) was declared, which was also in line with our expectation.

Year-on-year, 1QFY15 revenue increased marginally by 2% to RM133.6 million due to the higher volume in liquefied natural gas (LNG) and dry bulk cargo. 

Earnings before interest, taxes, depreciation and amortisation (Ebitda) grew in tandem with revenue at 0.5% to record RM94.3 million. However, higher amortisation of intangible assets (19.7%) brought profit before tax down by 9.8% to RM55.3 million. Net profit declined by 13.5% to RM35.5 million as a result of a higher effective tax rate of 24.7% (1QFY14:21.4%). Quarter-on-quarter, revenue was 10.2% lower, which we think can be attributed to seasonality. 

Ebitda was 6.1% lower at RM94.3 million due to the lower revenue, but net profit was down by only 4.4% in comparison due to the lower effective tax rate of 24.7% vis-à-vis 27.7% in 4QFY14. As  a result, the group recorded net profit of RM35.5 million.

Moving forward, the handling of LNG vessel calls and cargoes is still expected to be the largest revenue contributor to the group, backed by the interim phase of Samalaju Port while LNG volume is expected to be subdued due to the slowing demand.

Throughput contribution from Samalaju Port is expected to be insignificant in the near future, but the completion of phase 1 of Samalaju by 2QFY16 could further improve volume.

All in all, we are optimistic on the long-term prospects of Samalaju as it will potentially boost and stimulate economic activities in Sarawak on the back of the Sarawak Corridor of Renewable Energy initiative.

We have made housekeeping changes to our earnings forecasts after updating the figures from Bintulu Port’s annual report. Net profit estimates for FY15 and FY16 were fine-tuned downwards by 0.9% and 0.6% respectively. — Kenanga Research, June 1

This article first appeared in The Edge Financial Daily, on June 2, 2015.