PST – UOBKH

Lower DPU in 1Q08, but should improve with impact of new ships‏

Pacific Shipping Trust (PST) reported a net profit of US$0.466m for 1Q08. Excluding fair value losses on interest rate swaps of US$3.645m, net profit would have been US$4.111m. This appears to be ahead of our 2008 net profit of US$14.0m. Net profit for the remaining quarters of the year should register higher earnings due to the impact of 2 new containerships.

However, PST has declared a DPU of 0.97 US cts, 6.7% lower than 1Q07’s 1.04 US cts. PST has lowered its payout to 90% from 100% because it believes it is prudent to set aside cash to provide for future working capital and to support long-term strategic development of the trust. We have assumed a payout of 95% in FY08 instead of 90%. We are currently forecasting a DPU of 4.4 US cts for FY08. Maintain BUY and our target price of US$0.50.