HPH Trust – DBSV

Smooth sailing so far

• Year-to-date throughput numbers in HK and Yantian Port are largely on track with our expectations

• 7%-8% throughput growth along with modest improvement in rates to drive EBITDA growth in FY11

• Maiden interim DPS of c. US 1.8cts projected when HPHT reports 1H11 earnings before mid August

• Maintain BUY and US$1.15 TP

Throughput volumes on track with our projections. Throughput volumes for the first four months of 2011 rose by 5.7% y-o-y at Yantian Port, 7.9% at COSCOHIT, and we believe by between 6%-8% at HIT, which means that operations at HPH Trust are on track to meet our expectations for FY11.

Firm prospects over the short and medium term. We like HPH Trust for its stable and growing earnings profile, which we believe will be driven by continued rising trade volumes into and out of the Pearl River Delta region, translating into an annual growth of 10% in distributions to unit-holders for the next few years. HPH Trust is due to report its interim results by mid-Aug, and we are expecting a DPS of c. 1.8UScts to be declared.

Maintain BUY and US$1.15 TP. Given that HPH Trust seems to be well on its way to meet our projections in FY11/12, current FY11/12 yields look very attractive at 6.6%/7.2%; expect DPU CAGR of 10% up to 2013. Maintain BUY on the stock with a TP of US$1.15. This implies a total return potential in excess of 30% at current prices. Amongst Singapore listed REITs, Business Trusts and high yield plays, HPH Trust offers one of the highest combinations of yield and DPU growth.