Hit by fewer LNG calls

Stock Name: BIPORT
Company Name: BINTULU PORT HOLDINGS BHD

Research House: CIMB

Price Call: HOLD

Target Price: 7.20

Bintulu Port Holdings Bhd - INITIATING COVERAGE - Buoyed by a high Score

Stock Name: BIPORT
Company Name: BINTULU PORT HOLDINGS BHD

Research House: CIMB

Price Call: HOLD

Target Price: 7.30

Transportation & Logistic - Neutral - 28 March 2012

Stock Name: AIRASIA
Company Name: AIRASIA BHD

Research House: KENANGA

Price Call: BUY

Target Price: 4.06

Stock Name: MAS
Company Name: MALAYSIAN AIRLINE SYSTEM BHD

Research House: KENANGA

Price Call: SELL

Target Price: 1.06

Stock Name: MISC
Company Name: MISC BHD

Research House: KENANGA

Price Call: HOLD

Target Price: 5.47

Stock Name: BIPORT
Company Name: BINTULU PORT HOLDINGS BHD

Research House: KENANGA

Price Call: HOLD

Target Price: 7.00

We are maintaining our Neutral rating on the Transportationsector while maintaining Bintulu Port as our top pick for a defensive stanceduring the current uncertain global economic outlook. We believe that BintuluPort would be able to maintain at least a 37.5 sen dividend  (6% dividend yield) throughout the constructionof Samalaju Port. With the  potentialearnings diversification from Samalaju Port, Bintulu Port will be the  port of call for industrial products supportedby steady LNG vessels volume.  Meanwhile,for airlines, the headwinds from high oil prices and low loads will remainstrong in 2Q12. On top of that, with the lingering controversy on the sharesswap deal between MAS (UP, TP: RM1.06) and AirAsia (OP, TP: RM4.06), this willbring greater uncertainties in the near term for the deal and especially forMAS' business direction. For the shipping sector, we are still Neutral on thesector but we have upgraded our call on MISC from an Underperform to a MarketPerform with a Target Price of RM5.47 on account of lower downside risks to thestock in the near-term. 

Mixed bag of FY11results.  Thus far, most of thetransportation and logistics companies under our coverage have had their FY11earnings coming in within our expectations except for MISC and MAS. We aremaintaining our UNDERPERFORM rating on MISC and MAS as we believe bothcompanies' earnings will continue to be subdued throughout the year. Both companieshave reported higher than expected losses due mainly to their high operating costand lower revenue. 

Low season forairlines in 2Q12. We are not bullish on the airline sector at this junctureas 2Q is generally the low season for airlines especially AirAsia. For MAS, wedo not expect it to turn profitable in FY12 as we believe that there are stillrooms for further 'kitchen sinking' exercise on its aircrafts early redelivery.This will eventually increase its operating cost. We expect more news flow onMAS-AirAsia shares swap and the delivery of MAS's new A380s but this will notlikely help the sentiment on the share price due to the expectation of FY12 losses.In a nutshell, 2Q12 will be a crucial period for MAS to secure financing for the deliveries of its aircraftsi.e. A380s given that its cash balance is at a critical level of RM550m. 

Bigger picture forBintulu Port. For a longer term investment stance, we are positive on BintuluPort due to its potential earnings upside from Samalaju Port once it is completedin about 3 years' time. Even on a shorter term outlook, its consistent dividendpayout will be attractive to investors looking to weather the economicuncertainties. As for its dividends, we believe that the potential CAPEX forSamalaju  Port will not affect BintuluPort's dividend payout as 30% to 40% of the CAPEX (RM500m) will be financed bythe government through a government grant. Based on our analysis, Bintulu Portwill be able to pay at least a 37.5sen dividend throughout the constructionperiod of about 3 years. 

Shipping tounderperform still. With the uncertainties in the US and global economy, weexpect the shipping sector to be gloomy in the near term. Rates for dry andliquid bulk are expected to be lacklustre and temporary hiccups are expected asthe overcapacity issue for vessels remains a  concern. As  such, we have downgraded our TP on MISC  to RM5.47 (from RM6.05) as we have fine-tuned our valuation for its businesssegments and remove the earnings of the liner business. However, given  that the price of the stock has retraced to levelseven lower than our revised TP (offering a  current  6.1% upside  to  the TP),  we  are upgrading our call on MISC to a MarketPerform (from an Underperform).

We are maintainingour NEUTRAL recommendation for the sector for 2Q12.  Our Top Sell for the sector is MAS (UP, TP:RM1.06) and our defensive pick is Bintulu Port (MP, TP: RM7.00). Some of thekey areas of concern for the sector for 2Q12 are (1) high oil prices, (2) aseasonally low season and (3)  uncertainand unsustainable global economic recovery in the near term. 

Source: Kenanga 

Bintulu Port - 4QFY11 earnings boosted by tax incentives BUY

Stock Name: BIPORT
Company Name: BINTULU PORT HOLDINGS BHD

Research House: AMMB

Price Call: BUY

Target Price: 8.40

We maintain our BUY rating on Bintulu Port with our fair valueraised to RM8.40/share based on our DCF valuation.

BiPort's FY11 earnings came in at RM171mil or 18% above ourexpectation, despite generating lower revenue (-5% YoY). This was due to astrong 4QFY11, whereby earnings jumped by about half to RM60mil. The groupdeclared a final dividend of 7.5 sen/share and a special dividend of 7.5 sen/share,taking total DPS for the year to 30 sen. 

The outperformance can be explained mostly by the tax incentivein the form of investment allowance amounting to RM16mil. We understand thatinvestment allowance rate was 60% in respect of the capex incurred from2008  to 2012 and there will be a refundof RM33.5mil. The group would continue to utilise the tax incentive until nextyear.

We believe this is a form of compensation, given that the federalgovernment and BiPort have yet to finalise the extension on the port lease tenure. Any capex recently committedwould be depreciated against a short port tenure which would result in highdepreciation charges.

We are estimating a net profit of RM190mil (+11% YoY) and RM195mil(+2% YoY) for FY12F and FY13F, respectively. FY12F earnings would be boosted bythe tax incentive although this should taper off in the following year.LNGrelated port charges will continue to be the key driver to its earnings,accounting for about 60% to 70%.

That aside, we believe the interest in the company would bepremised on its expected 'monopoly' on SCORE's logistics requirements, viaSamalaju Port. Recently, the federal government has approved RM500mil to fundthe maiden phase of the new port.

As we have highlighted in our previous report, while BintuluPort is in a healthy balance sheet position, we believe the group wouldcertainly welcome funding from the government. Note that recent feasibilitystudy mentioned a higher cost of development for the new port ' circaRM2bil-RM3bil versus earlier estimates of RM1bil. 

At the outset, i.e. in 2013, there could be at least 5million tonnes of raw materials to be required by 10 out of 17 confirmedinvestors at the Samalaju Industrial Park. This is more than double ourconservative base case assumption of 2mil tonnes throughput.   

Source: AmeSecurities

BIPORT (FV RM7.10 - NEUTRAL) FY11 Results Review: Margins Down

Stock Name: BIPORT
Company Name: BINTULU PORT HOLDINGS BHD

Research House: OSK

Price Call: HOLD

Target Price: 7.10

Bintulu's FY11 earnings may have come in within our andconsensus forecasts, but we wish to point out that the company has made severalrestatements of its accounts to comply with several new accounting rules. Whilerevenue was higher as expected given the higher LNG cargo volume generated,margins shrank some 40bps as the non cargo business incurred higher operationcosts as its volume has yet to reach the level at which it can achieveeconomies of scale. We maintain our earnings and NEUTRAL call, with a higher FVof RM7.10. 

Incorporating  new accounting standards.  Due to the adoption of new accounting standards,there is no q-o-q earnings comparison given that the company had to restate itsconcession-related assets although we reckon that its earnings are deemed inline. Bintulu Port's 4QFY11 revenue grew 6.17% y-o-y on higher non LNG cargorevenue as we expected, as the company added container capacity. For the fullyear, operating revenue grew 6%, in line with our expectations.

Margins take the cut.Due to the growing revenue from non LNG cargo for which the margins are not aslucrative as those for LNG, Bintulu Port saw margins contract by an estimated40bps, as higher staff and operational maintenance costs also took a bite. We seethis as the trend moving forward until it achieves economies of scale uponhitting a higher volume handled.

Waiting for Samalaju.  Management has yet to finalize the long-drawnongoing discussions to operate Samalaju Port and its ownership structure,Currently, it has yet to determine the funding for this venture, butindications point to possible fund raising through the debt market. As of now,negotiations for lower lease rental as well as lower berthing tariff hike forits LNG tankers are still pending.

Dividends.  Bintulu Port announced a final dividend of 15sen (marginally above our estimates), bringing the full year dividends to 37.5sen (unchanged from 2010), representing a total net yield of 5.3%.

Maintain NEUTRAL.  We maintain our earnings forecast for now,pending full understanding of the new accounting standards. Nonetheless, ourDCF based valuation remains unchanged as it captures cash flow. As we roll overour DCF, our FV is adjusted upwards to RM7.10. Maintain NEUTRAL,  although we like the stock for its stableyield.

Source: OSK188

Bintulu Port - Dividends come into port

Stock Name: BIPORT
Company Name: BINTULU PORT HOLDINGS BHD

Research House: CIMB

Price Call: HOLD

Target Price: 7.00

Target RM7.00

FY11 reported earnings beat our forecast by 16% but would have been 7% below our forecast if not for a tax refund. Despite the upcoming large capex for the new port, Bintulu Port did not disappoint with its dividends, announcing a 15 sen final DPS.

Source: CIMB Daybreak - 1 March 2012, Full PDF Report

Bintulu Port - New LNG train on the way BUY

Stock Name: BIPORT
Company Name: BINTULU PORT HOLDINGS BHD

Research House: AMMB

Price Call: BUY

Target Price: 8.33

' We maintain our BUY rating on Bintulu Port, with our fair valueunchanged at RM8.33/share. Our DCF valuation assumes a cost of equity of 7.9%with a terminal growth rate of 1%.

' We understand Petronas would add an additional liquefied naturalgas (LNG) train with a capacity of 3.6mtpa at its LNG complex in Bintulu. Thenew train will take its total capacity to 27.6mtpa. 

' The contract for the front-end engineering design (FEED) forthe new train project has been awarded to JGC Corporation and to a partnershipbetween Chiyoda Corporation and Saipem S.p.A.

' There will be no additional capex required as the three jettieswould be able to accommodate 28mtpa of LNG throughput. Bintulu Port has, onaverage, handled about 23mtpa of LNG over the past five years. We are expectingthroughput to be flat over the next few years as it is already operating atalmost full capacity.

' We are not changing our estimates as the new LNG Train 9 wouldonly start operations in 4Q2015, which is beyond our forecast horizon.Nonetheless, we estimate the additional 3.6mtpa throughput will bring inadditional RM35mil (accounting 8% of FY10 revenue) in revenue ' via berthcharges ' and circa RM10mil in pre-tax profit to Bintulu Port. Also, the impactto our DCF valuation will only be minimal, an increase of only 4%.

' That aside, we believe the interest on the company would bepremised on its expected 'monopoly' on SCORE's logistics requirement viaSamalaju Port. The federal government has recently approved RM500mil to fundthe maiden phase of the new port. 

Source: Amesecurities

RM500mil federal fund for Samalaju Port

Stock Name: BIPORT
Company Name: BINTULU PORT HOLDINGS BHD

Research House: AMMB

Price Call: BUY

Target Price: 8.33

Designer for Samalaju Port appointed

Stock Name: BIPORT
Company Name: BINTULU PORT HOLDINGS BHD

Research House: AMMB

Price Call: BUY

Target Price: 8.33

BIPORT - CIMB Research maintains Neutral on Bintulu Port

Stock Name: BIPORT
Company Name: BINTULU PORT HOLDINGS BHD
Research House: CIMB

KUALA LUMPUR: CIMB Equities Research said Bintulu Port's 1Q11 core net profit came in within expectations, at 26% of its full-year estimate and 27% of consensus.

It said on Friday, May 27 that the interim single-tier dividend of 7.5 sen declared for the quarter was expected.

'In the absence of earnings surprises, we are retaining our FY11-13 earnings projections and DCF-based target price of RM7.00. We maintain our NEUTRAL rating as Bintulu Port's lack of earnings catalysts should be compensated by its high gross dividend yields of 8%.

'However, we prefer Malaysia Airports for exposure to the transport infrastructure sector,' it said.

BIPORT - Bintulu Port gets 'neutral' call at OSK

Stock Name: BIPORT
Company Name: BINTULU PORT HOLDINGS BHD
Research House: OSK

OSK Research has a "neutral" call for MISC Bhd and Bintulu Port Sdn Bhd with RM8.20 and RM6.86 forecast value each.

The research house said it saw Petronas liaising with its Japanese counterparts to supply immediate additional liquefied natural gas (LNG) to Japan.

"While additional revenue could be reaped from the slightly longer route taken to ship the LNG volume, the overall impact would be negligible in nudging MISC's earnings significantly, and no impact on Bintulu Port.

"As such, we see muted impact from this move although trading on the spot market could be a boon for Petronas given that 10 per cent of its volume are sold on a spot basis," it said in a research note today.

Petronas had said recently it was working with buyer nations in the Far East on possible cargo swaps to cater for increased LNG requirements. -- Bernama