KUCHING: Bintulu Port Holdings Bhd’s (Bintulu Port) long-term prospects have been viewed positively by analysts despite it recording softer revenue growth for the third quarter of 2014 (3Q14).
“3Q14 saw softer revenue growth and higher operating expenses but we believe earnings should pick up in the traditionally stronger 4Q. More significant growth may be seen only when Samalaju Port is completed,” RHB Research Sdn Bhd (RHB Research) highlighted in a recent note.
It added, it expects more growth might be seen only upon completion of the Samalaju Port expected in the first half of 2016 (1H16).
In a separate note, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) said, according to the management, the throughput contribution from Samalaju port will be insignificant in the near term and they expect the throughput contribution to amount to 4.9 million metric tonnes per year possibly in 2016.
“For the time being, Bintulu Port remains as the major revenue contributor for the group with completed interim phase Samalaju port supporting the operations with bulk division expected to contribute positively to the group.
“Phase 1 of Samalaju is expected to be only completed in 2Q16 and we believe that earnings could be marginally hit in the first year when it commences its operations with breakeven period of circa two years at least,” it said.
Kenanga Research further viewed, “Overall, we are still positive on the long-term prospects of the project as economic activity in Sarawak is expected to pick up due to the Sarawak Corridor of Renewable Energy (SCORE) initiative.”
To recap, Bintulu Port’s 3Q14 core net profit came in at RM34.7 million, bringing its cumulative first nine months of 2014 core net profit to RM106.2 million.
“This is slightly below our, and street’s, full-year estimates, at 69.8 and 67.5 per cent, respectively. This is due to higher-than-expected depreciation cost and staff cost,” Kenanga Research noted.
It further explained, core net profit in 3Q14 plunged 20.7 per cent year-on-year (y-o-y) mainly due to higher effective tax rate (3Q14 at 20.8 per cent compared with 3Q13 at 13.1 per cent) caused by the absence of tax allowance in 3Q14, higher manpower expenses, and higher depreciation cost.
It added, Bintulu Port’s net earnings improved 14 per cent, quarter-on-quarter (q-o-q) in 3Q14 on lower staff cost on q-o-q basis as 2Q14 includes payments of performance merits, and higher bulking services revenue.
“In 9M14, core net profit grew marginally by 1.9 per cent mainly driven by y-o-y growth in cargo volume handled in Bintulu Port and its bulking division despite being marginally offset by higher depreciation and staff costs,” it added.
Overall, based on its performance, Kenanga Research tweaked its staff cost assumptions upwards from 14 to 14.5 per cent as a percentage of revenue in FY14.
“On top of that, we also increased our depreciation assumption in FY14E and FY15E by 100 basis points to account for higher depreciation cost. As a result, our earnings forecast for FY14 and FY15 have been trimmed by 8.3 and 6.8 per cent, respectively,” it said.
The research firm maintained an overall ‘outperform’ on the group. RHB Research kept its earnings forecast unchanged and retained its ‘neutral’ recommendation on the stock.