Investor Centre

Investor Centre

(Extracted From Annual Report 2021)

In 2021, the impacts of the COVID-19 pandemic continued to dominate global shipping trade. Supply chain bottlenecks, port congestion, and temporary terminal shutdowns due to virus outbreaks had led to major cargo backlogs and container service delays. Nevertheless, a global trade resurgence delivered a strong first six months, and ongoing demand in the second half capped another solid year of growth for HPH Trust.

Looking ahead to the challenges expected in 2022 – starting with those posed by the ever-changing pandemic – the Trust remains as determined as ever to strengthen its capabilities and fine-tune port management through collaboration. Reliable financial management, agile responses to fluid situations and a commitment to set industry standards for customers give the Trust the best basis to forge ahead under the “new normal” of the pandemic.

Throughput Growth Amid A Supply Chain Crunch

Throughput for the ports of HPH Trust jumped 13% in the first half of 2021, thanks to a global economic rebound from the pandemic downturn, particularly for outbound cargoes to the US and Europe. Meanwhile, the growth eased in the second half of 2021 and was lower compared with the same period in 2020. This was expected, as a result of high yard density and COVID-19 preventive measures.

For full year, with YANTIAN as a key export hub in the GBA, riding high on a cross-border e-commerce boom, and the Kwai Tsing Terminals continuing to serve as an important transshipment hub, HPH Trust comfortably posted year-on-year throughput growth of 4% in 2021. TEU topped 24.5 million. Outbound cargoes to the US increased by 7% in the year under review, while outbound European cargoes registered 11% growth. YANTIAN’s throughput increase was mainly attributed to increases in the US, European and empty cargoes. Throughput at Kwai Tsing Terminals recorded a slight drop in 2021.

Average revenue per TEU for YANTIAN and Kwai Tsing Terminals exceeded 2020 levels. For YANTIAN, the increase was mainly attributed to higher storage income and Renminbi appreciation. For Kwai Tsing Terminals, it was due to higher storage income.

Revenue and other income totalled HK$13,244.1 million – an increase of 24% compared to HK$10,705.8 million in 2020. This was a result of greater throughput, Renminbi appreciation and higher storage income.

Strong Operating Results From Profit Growth

The cost of services rendered for the year under review was HK$4,474.7 million, 25% up on HK$3,568.4 million in 2020. This result was attributed to greater throughput, higher direct charges due to high yard density, higher fuel prices, Renminbi appreciation and the costs of measures to deal with COVID-19. Efficiencies created by HKSPA and other cost control initiatives partially offset the cost increase.

Staff costs of HK$257.2 million and depreciation and amortisation of HK$3,050.9 million were similar to 2020.

Other operating income in 2021 was HK$417.9 million, representing a 116% increase against HK$193.2 million in 2020. The increase was mainly due to higher government subsidies. Other operating expenses totalled HK$500.4 million. This marked a 3% decrease against HK$513.3 million in 2020, and was attributable to claims recovery received in 2021 for the impacts of typhoon Mangkhut in 2018.

Total operating profit was HK$5,378.8 million, representing a HK$1,871.9 million or 53% increase from 2020. Profit for the year was HK$3,527.2 million, an increase of HK$1,514.7 million or 75% compared to 2020. The growth was mainly due to a higher operating profit and a decrease in interest costs.

Profit attributable to HPH Trust unitholders was HK$1,747.2 million, representing an increase of HK$915.8 million or 110% from 2020.

Strength Built On Prudent Financial Planning

In the face of the continuing challenges caused by the pandemic, the Trust has been steadfast in its long-term capital management efforts and kept a solid balance sheet. At the end of 2021, the Trust had a total cash balance of HK$11,048.0 million, which was HK$3,281.4 million more than in 2020. This resulted in HK$17,990.0 million in net debt by year end, a 17% decrease against 2020.

During the year, a joint venture agreement was signed with Shenzhen Yantian Port Group Company Limited to develop YANTIAN East Port Phase I. The share capital injection by HPH Trust was financed by internal cash, which was originally used for debt payment pursuant to the five-year debt repayment plan in place since 2017, with a minimum annual repayment of HK$1 billion on existing debts. Total borrowings decreased to HK$29,038.0 million as of 31 December 2021, down from HK$29,420.0 million the year before. To manage the interest risks, HPH Trust increased the portion of fixed rate borrowings to 81% as of 31 December 2021 from 66% as of 31 December 2020. During this year, the Trust issued two five year US$500 million guaranteed notes due in 2026, and repaid bank loans of approximately HK$8,182.0 million.

The Trust has recommended a total payout of HK$1,263.1 million for 2021, which arrives at a distribution per unit of 14.5 HK cents. Based on the US$0.225 market price as at 31 December 2021, the distribution yield stands at 8.3%.

Outlook

The global trade resurgence of 2021 was complicated by a supply chain crunch and the continuing uncertainty created by COVID-19, which posed many challenges for the cargo shipping industry. HPH Trust is committed to doing its part to achieve stability in global supply chains by operating its terminals as efficiently as possible. Most importantly, it will continue to consolidate its foundations through disciplined capital management and prudent spending.

In the new year, the Trust will strive to increase operational efficiency and manage costs carefully, to sharpen the competitive edge of its ports. Above all, the Trust has the instincts, boldness and resources to capitalise on new opportunities and respond to industry trends. The strong position it has built over the years puts the Trust in a very satisfactory place from which it can continue building a sustainable business for the long term.

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