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Hutchison Port Holdings Trust unit price flat as it reports a 19.7% decline for Q2 net profit

HPH Trust’s net profit for the second quarter fell by 19.7% to HK$136.5 million, from HK$170.0 million a year ago.

Units of Hutchison Port Holdings (HPH) Trust were flat as investors stand pat on the expected weak second quarter results affected by challenges from the global trade environment.

HPH Trust’s net profit for the second quarter fell by 19.7% to HK$136.5 million, from HK$170.0 million a year ago. Earnings per unit was at 1.57 Hong Kong cents, down from 1.95 Hong Kong cents a year ago.

Revenue fell by 1.4% to HK$2.74 billion, from HK$2.79 billion a year ago.

HPH Trust units were unchanged on Thursday morning, at US$0.225, following the trust's second quarter results release which was put out on the Singapore Exchange after the market closed on Wednesday.

Challenging external environment threatens recovery of global trade

In its results announcement, HPH Trust said that the external global environment continues to be challenging. The trade tensions between the United States (US) and China have heightened in recent months, with new tit-for-tat tariffs imposed in the second quarter of 2019, it said.

‘Trade protectionism, macro-economic and political uncertainties, including the slowing Chinese and European Union (EU) economies and the yet-to-be-resolved Brexit from the EU, threaten the recovery of global trade,’ HPH Trust added.

HPH Trust said the outbound cargoes to the US remained weak in the second quarter of 2019 and it is expected to be volatile in the second half of 2019 as the US-China trade dispute continues.

Given the uncertainties in the global trade outlook, the manager of HPH Trust said that they remain cautious about future cargo trends and will continue to adhere to cost discipline and efficiency improvements in order to face the challenges ahead.

US-China trade negotiations expected to continue to impact HPH Trust

Experts have previously cautioned on the impact of the US-China trade war on the container port business.

‘Despite a decent prospective yield of 7.4% on offer, we remain neutral on HPH Trust as it remains vulnerable to the on-going trade dispute between the US and China as its key port assets in Shenzhen and Hong Kong are heavily exposed to China’s export sector,’ DBS Bank had said in an April report.

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