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Thursday, 10 March 2011

Hutchison Port Holdings Trust

Hutchison Port Holdings Trust ("HPHT") is the world's first publicly traded container port business trust. It is sponsored by the world's top port operator - Hutchison Port Holdings Limited. The IPO will end on 14 March 2011 at 10am and the price will be determined on that day. Trading will commence on 18 March 2011 at 2pm.

The port assets are mainly in HK and Shenzhen and with China being the world manufacturer, the prospects continue to look good as shipping continue to be a cheaper way of shipping bulk goods.

HPHT is offering public investors 185.185m and between 3.43 bln units to 3.71 units via placement. The offering price is between US$0.91 to US$1.08. The market cap will be between US$7.9 bln to US$9.4 bln. Cornerstone investors include : Capital Research -US$634 million, Paulson & Co - US$350 million stake and Lone Pine Capital LCC - US$186 million.
Jenkin Hui and family, Singapore’s Temasek Holdings Pte., Cathay Life Insurance Co. and Metropolitan Financial Services will each invest US$100 million, and Ally Holding will buy a US$50 million stake.

Based on the prospectus, the yield for FY11F will range from 5.5% to 6.5% (based on max and min offering price) and from 6.1% to 7.5% for FY12F. 

The IPO looks like a good buy to me with good dividend yield and with many strong cornerstone investors. It should be a good long term portfolio stock as well and would not have listed here had it been able to list on the Hong Kong bourse.

Sunday, 6 March 2011

Hutchison Port Holdings

SGX has its more "advanced" regulations in listing Business Trust to thank for that it is be able to attract Li Ka-Shing's Hutchison Port Holdings Trust ("HPT") to list here rather than in Hong Kong.  

It is the first listed container port business trust and the market leader in the world's largest trading hub - the Pearl River Delta. The investment mandate is to invest, develop, operate and manage container ports as well as other port assets. It is likely to take the honor of the largest IPO ever on SGX. The indicative price range is from US$0.91 to US$1.08 per unit and the yield is expected to be 5.5%-6.5% for FY2011 and 6.1%-7.2% for FY2012.

The yield is pretty attractive and with China likely to be leading the world's economy for the next decade, the assets should be worth much more as well in future. If i am forced to choose, I would definitely prefer this over the Perennial China. It is likely to be an attractive stag for me and the IPO has attracted key cornerstone investors including Temasek, Paulson & Co and Cathy Life Insurance.  

Multiple applications is allowed for placement and public offer tranche. I am sure PSA will be looking at this closely to see how they can monetise their assets by listing the port assets. I will update again on the yield once the pricing from the book building is finalized.

Perennial China Retail Trust

Latest update:  Reuters reported that Perennial China Retail Trust's IPO will be deferred. The posting below was made prior to that.

I will do a short preview on this and Hutchison business trust as there are many of you interested to know as many were offered placement shares and the book building will close this week. My analysis is preliminary and based on the term sheets which I received and will be updated when the IPO is launched.

Perennial China Retail Trust is launched by the former Capitaland retail head Pua Seck Guan.  I don't think the departure was that amicable as he was in a privileged position to know how Capitaland operates and how they manage their projects etc. It is like you owning a saloon and one of your key hair stylist opening a shop in the same shopping mall and he knows who your top customers are, how you make money, what kind of margins to charge etc. On the other hand, this is none of "my business"and you probably know this guy knows how to run his business and you are in good hands. 

The Business Trust listing will be on the main board of SGX and its focus is in China.  The trust is offering 1,092,000,000 units of which 55% is for international placement, 40% for cornerstone and up to 5% for the public. The indicative price is S$1 per unit and is priced at a 22% discount to analysts consensus NAV per unit. The distribution yield is projected at 3% for FY2011 and 3.1% for FY2012. Do note that this is not a REIT, it is a Business Trust. The difference between a business trust and reit can be found here.

Another "relative" peer will be Capmallasia. The entity is trading at 1.16x price to book and have a yield of 1.143%. In that regard, Perennial China Retail Trust is more attractively priced for investors who like to have an exposure to the China Retail sector. 

I will comment on whether the share is worth a stag and its "fair value" when the final prospectus is registered and the pricing finalized.

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