Hutchison Whampoa's ports unit is looking to raise as much as US$5.8 billion (S$7.3 billion) in an initial public offering in Singapore, allowing investors to tap into China's booming infrastructure business. South-east Asia's biggest listing comes at a time when intra-Asia sea-borne trade is swelling, and global container-shipping firms are putting more ships and resources to serve Asian routes from Europe and North America.
Background:
Hutchison, the world's largest container-terminal operator, is owned by Hong Kong tycoon Li Ka Shing, who is spinning off HPH Trust in the separate listing in Singapore to take advantage of regulations that are favourable for trust-like companies.
The Business portfolio of HPH Trust comprises:
HPH Trust’s interest in the operators of the Portfolio Container Terminals which consists of:
(i) Hongkong International Terminals Limited, the owner and operator of Terminals 4, 6, 7 and two berths in Terminal 9 at Kwai Tsing, Hong Kong (“ HIT ”);
(ii) 50% interest in COSCO-HIT Terminals (Hong Kong) Limited, the owner and operator of Terminal 8 East at Kwai Tsing, Hong Kong (“ COSCO-HIT ”);
Together, HIT and COSCO-HIT had approximately 60% of the market share of Kwai Tsing Port, Hong Kong, by throughput in 2009 and operate 14 of the 24 deep-water berths in Kwai Tsing Port, Hong Kong;
(iii) 56% interest in Yantian International Container Terminals Limited, the operator of Yantian International Container Terminals Phases I and II;
(iv) 50% interest in Yantian International Container Terminals (Phase III) Limited, the operator of Yantian International Container Terminals Phase III and its expansion project, which is being developed; and
(v) 50% interest in Shenzhen Yantian West Port Terminals Limited, the operator of Shenzhen Yantian West Port Terminals Phase I and Shenzhen Yantian West Port Terminals Phase II, which is being developed.
Yantian (which comprises Yantian Phases I & II, Yantian Phase III, Yantian Phase III Expansion, West Port Phase I and West Port Phase II) is the leading privately owned and operated deep-water container port in East Shenzhen, and the overall market leader in Shenzhen with a market share of approximately 47% by throughput in 2009.
Investors:
Paulson will invest US$350 million in the IPO, whereas a Temasek unit will put in US$100 million. Singapore port giant PSA International has a 20 per cent stake in Hutchison's portfolio of ports, which it bought for US$4.4 billion in 2006. PSA itself has long talked of a public listing here, but has no immediate plans to launch an IPO.
The prospectus link as below:
http://masnet.mas.gov.sg/opera/sdrprosp.nsf/e25d3309aa11eacd48256f64000f86d1/42732CEE2BFBBB75482578450010B1AC/$File/HPH%20Trust%20Preliminary%20Prospectus%20(28%20Feb%202011).pdf
Distribution Yield :
5.5% - 6.5% (FY2011) and 6.1% - 7.2% (FY2012) ; based on the minimum and maximum offering prices.
The NAV calculation as below:Total Equity (Net Assets)=US$1371.2 millions (Based on latest finanical results on AY2010)
No. of shares issued=3619.29 mil to 3899.51 millions
Net Asset Value (NAV)=US$1371.2/(3619.29 ~ 3899.51)= US$0.35 ~ $0.38
In my opinion, it's NOT a bargain buy as compared to the Offering Price at US$0.91 ~ US$1.08.
Just to share my personal investment feeling throughout the journey of learning to be a market investor
Update from The Edge Singapore (07-Mar-11):
ReplyDeleteHutchison plans ‘sizeable’ capital spending after port trust IPO
Hutchison Whampoa, controlled by billionaire Li Ka-shing, intends to carry out “sizeable” investments in retail, property and other areas this year helped by a planned US$5.8 billion ($7.3 billion) initial public offer at a port unit.
“We are planning to release a sizeable amount of capex this year,” Managing Director Canning Fok told reporters in Singapore today. He didn’t elaborate further on the company’s investment program.
Hutchison decided to sell a stake in a port trust to help cut its debt-to-equity ratio to about 20% after considering alternatives including a rights offering, Fok said. The IPO for the Singapore-listed trust may be a record for Southeast Asia, according to DBS Bank, one of the arrangers.
“The response from investors has been overwhelming and enthusiastic,” Fok said.
Hutchison is offering about 5.4 billion units in Hutchison Port Holdings Trust at a price of 91 cents to US$1.08 each, excluding an overallotment offer. The trust will own port assets in Hong Kong and neighboring Guangdong province. Hong Kong-based Hutchison plans to manage the trust and retain a stake of about 25%.
Cornerstone investors led by Capital Research & Management Co. and Paulson & Co. will invest US$1.62 billion ($2.05 billion) in the IPO, Hutchison said last month.
The sale could surpass the US$4 billion raised in Singapore Telecommunications Ltd.’s 1993 IPO and the total amount raised in Singapore IPOs last year. Deutsche Bank AG and Goldman Sachs Group Inc. are helping manage the sale.
WATSON, SUPERDRUG
Hutchison’s other assets include property in Hong Kong and mainland China as well as the Watson and Superdrug drugstore chains. The company also invests in mobile-phone services and energy.
Hutchison fell 0.8% to HK$90.60 in Hong Kong trading today. It’s gained 13% this year, the third-best performance on the city’s benchmark Hang Seng Index.
The company opted to sell the port assets in Singapore as business trusts can’t be listed in Hong Kong. The company chose a trust structure because of the assets’ stable cashflow and growth potential, it said in January.
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