HPH Trust expects little impact from trade war

Cargo volumes would be hit by about 2% if US tariffs on China exports happen, it says

Hutchison Port Holdings (HPH) Trust estimates that its cargo volume would take only a minor hit if tariffs mooted by the United States on China exports materialise.

Chief executive Gerry Yim said at a briefing yesterday that the items targeted by the US were mostly from heavy industry. This would affect ports in Tianjin and Dalian rather than Hong Kong and Shenzhen, where HPH ports are located, while high-tech products are often air-flown rather than shipped by sea.

HPH Trust's ports tend to handle exports such as garments, furniture, toys and electronics. Only electronics are on the sanctions list.

It expects the impact would hit cargo volumes by about 2 per cent.

Meanwhile, HPH's tariffs - what it charges shipping lines for their length of stay at the port - are likely to stay subdued despite earlier plans to raise rates. This is because of a decision in China in February to cut the reference tariff rate for origin and destination foreign trade containers at Shenzhen.

HPH Trust had initially planned to raise tariffs amid higher demand in Yantian as shipping lines increasingly deploy more mega vessels.

But after the authorities cut published tariff rates, Mr Yim conceded that "against this background, it will be rather difficult" to do so.

  • AT A GLANCE

  • REVENUE: HK$2.67 billion (+3.5%)

  • NET PROFIT: HK$145.4 million (-12.9%)

  • EARNINGS PER UNIT: 1.67 HK cents (-12.9%)

The trust's results had "no major surprises", he said.

Net profit fell 12.9 per cent to HK$145.4 million (S$24.3 million) for the first quarter while revenue rose 3.5 per cent to HK$2.7 billion for the three months to March 31. Earnings per unit fell in tandem to 1.67 HK cents, versus 1.92 HK cents a year earlier.

The terminal operator said container throughput at its Kwai Tsing port was 1 per cent higher than last year's, due to higher trans-shipment cargoes.

Throughput at Yantian International Container Terminals rose 8.7 per cent compared with the previous year, driven by the growth in empty and trans-shipment cargoes.

Average revenue per twenty-foot equivalent unit (TEU) for Hong Kong and China was below last year's, mainly due to revisions to tariffs following the merger and acquisition of some liners last year.

China's average revenue per TEU was also "adversely impacted" by "unfavourable trans-shipment mix", although this was partially offset by appreciation in the yuan.

"Outbound cargoes to the US continued to grow in the first quarter by 2 per cent, and outbound cargoes to the European Union were comparable to last year's," it said. Among the goods handled by the trust's ports, exports to the US make up about 20 to 30 per cent of the total pie.

HPH units closed 0.5 US cent down at 33 US cents yesterday.

A version of this article appeared in the print edition of The Straits Times on April 14, 2018, with the headline 'HPH Trust expects little impact from trade war'. Print Edition | Subscribe