HPH Trust's DPU fell marginally to 12.2 HK cents despite reporting a 31.9% surge in operating profit

Hutchison Port Holdings Trust (HPH Trust) announced a distribution per unit (DPU) of 12.2 HK cents for FY2024, a tad lower than the DPU of 13.2 HK cents in 2023. Revenue and other income rose by 8.8% y-o-y to $HK$11.57 billion.

FY2024's full-year throughput of HPH Trust was 5% above last year. Combined container throughput HIT, COSCO-HIT and ACT, (collectively HPHT Kwai Tsing) was 6.4% lower than last year, due to lower local and transshipment cargoes. The container throughput of Yantian International Container Terminals (YICT) increased by 12.4% as compared to 2023, driven by the increase in the laden exports, inbound empty and transshipment cargoes. Average revenue per TEU for Hong Kong was comparable to last year's. Average revenue per TEU in China was slightly higher than 2023. Outbound cargoes to the US and Europe increased by 14% and 12% respectively compared to last year

Operating expenses fell by 1.7% due to lower rent & rates, higher exchange loss in 2023 mainly arising from revaluation of YICT’s RMB denominated financial assets and disposal loss in 2023.

Operating profit rose by 31.9% to HK$4.4 billion. Profit attributable to unitholders surged 178.4% to HK$650 million. Free cash flow stood at HK$3.3 billion in FY2024, similar to FY2023's level. Net asset value of business trusts is not the way to look at their valuation as business trusts pay out their depreciation, hence HPH Trust's NAV fell to HK$2.80 as at Dec 31, 2024, down 7 HK cents y-o-y.  

Dividends received from investments were HK$12.8 million, HK$9.1 million less than last year due to lower dividend income from River Ports Economic Benefits. Dividends received from an associated company and joint ventures were HK$4.5 million, HK$73.3 million below last year due to a drop in dividend from COSCO-HIT and ACT. 

Although the export volume to the US in 4Q2024 was robust, driven by consumer demand, consumer spending confidence experienced a decline in December 2024 amid uncertainty around Trump’s policies after his inauguration. Extra tariff duties on imports and the high inventory levels in the US and Europe are expected to have a negative impact on the demand of Chinese products

New shipping alliances, Gemini Cooperation and Premier Alliance, become effective in this month.  Yantian is likely to benefit from being a hub for major alliances in South China. 

HPH Trust ended the week at 21 cents and 15.7 US cents.