Bintulu Port Holdings Bhd

Maintain neutral at RM7.20 with a revised target price of RM7.20 (from RM7.10): Bintulu Port’s (Biport) results for the first quarter of 2013 financial year (1QFY13) were — at 24% of our FY13 estimate — broadly in line with our expectation but slightly below market, at just 23% of consensus. There were more LNG calls in 1Q, leading to higher revenue though this was mostly offset by higher taxes paid.

While our net profit numbers are largely unchanged, as higher LNG contributions were offset by the increase in tax expense, we have cut FY13 to FY15 earnings per share by 7% to 10% for the 15% share base expansion following the placement. Our discounted cash flow-based target price (8% weighted average cost of capital) is increased slightly. We maintain our “neutral” rating. Biport declared an interim dividend of 7.5 sen, within our expectation.

LNG revenue remains the main driver of the port’s earnings, with LNG vessel calls and cargo contributing RM96 million in 1Q. Bulking services chipped in only RM9 million. Operating expenditure also increased 11% year-on-year due to higher expenses from charter hire, fuel and depreciation.

The Samalaju Port project is in progress, with the project’s RM400 million breakwater package put up for tender recently. The next package will involve the construction of four wharves, to be tendered out in June. Overall, the first phase of Samalaju Port is estimated to cost RM1.8 billion and will be completed in 2016. The capital expenditure will be financed by a combination of debt (RM1 billion to RM1.4 billion) and share placement (RM400 million).

Biport will place out 15% of its share capital or 60 million shares to the State Financial Secretary, Sarawak (SFSS) at RM6.65 per share, raising RM400 million. SFSS will become the largest shareholder with a 40% stake while Petroliam Nasional Bhd’s holding will be diluted to 28.5%.

SFSS is seeking a waiver from making a mandatory offer for the remaining shares in Biport. We have already factored the share placement into our valuation but not the debt issuance as we await more details. — CIMB Research, May 29


This article first appeared in The Edge Financial Daily, on May 30, 2013.

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