HPH Trust – BT

HPH Trust puts faith in ports’ scale, reliability

It sees boon from bigger ships, more sharing of vessels

BIGGER vessels, more shipping lines sharing vessels – all this only bodes well for the ports held by Hutchison Port Holdings (HPH) Trust, said its trustee-manager’s CEO in an interview with BT.

‘The trust ports, in terms of scale and service reliability, are probably the best in South China,’ said Hai Chi Yuet. ‘If a vessel handles 1,000 TEUs per vessel call versus one that handles 10,000 TEUs per vessel call, the bigger one saves time berthing and unberthing, deploying gangways, resources and the like.

‘And with consortiums working together, it may mean several such vessels at one time. They can only work with certain ports in the world, not to say in South China.’

At the same time, HPH Trust’s ports are more than capable of catering to smaller vessels.

This is key especially when HPH Trust, in its wrap up of the financial year ending Dec 31, 2011, said that it would grow its market share and volumes coming from faster growing economies in the Far East, Africa, Oceania and South and Central America that typically feature much smaller vessels.

‘That is not a problem. In Yantian, we have the biggest contiguous berth frontage. The deepwater handles the very big vessels, and we have other berth space that handles the smaller ones,’ said Ms Hai.

The decision to grow volumes out of faster, newer economies, said Ms Hai, is a logical one because of their growth rates.

She added: ‘And because of the growth of international transshipment, you want to have more coverage in services instead of covering just one or two areas. That’s how international transshipment is made viable.’

Ms Hai also cautioned that while they are working with its existing set of ocean carrier customers, channelling more volumes from these newer markets involves ‘scheduling and rescheduling and this takes time’.

With the movement westward of Chinese manufacturing, there may come a time when ships may bypass the port of Hong Kong entirely and opt to transship at closer-by South Chinese ports – but the time is not now.

‘Manufacturing may be going west, slowly. But what has happened over the 10-12 months, the Pearl River Delta is still the main cargo source,’ she said.

‘Hong Kong has found its own niche: it has a free port status that is unique – there’s nothing like that in China. And Hong Kong is right next to China, so it gives Hong Kong a very competitive edge. Hong Kong has a long way to go. It may not see double-digit growth, but its growth will be sustainable.’

Since HPH Trust’s debut on the Singapore Exchange last March, the stock has lost over 20 per cent from its IPO price of US$1.01. It closed trading yesterday at 78 US cents.

However, Ms Hai and CFO Ivor Chow are more than content with it choosing Singapore as a listing location, over Hong Kong, which had since then amended its rules to allow business trust structures to list.

Said Mr Chow: ‘Hong Kong tends to focus on PE and Ebitda, and Singapore investors tend to understand what yield is about. It’s actually more conducive in Singapore, investors ask better questions.’

However, HPH Trust continues to evaluate rule changes in Hong Kong that may allow it to float its units there one day.

‘If and when suitable, we would like to be back home as well,’ said Mr Chow. ‘A lot of investors in Hong Kong like to be investing in us, and it’s not as easy for them to be investing in Singapore. We did want to IPO in Hong Kong at first, but it was not possible at the time.’