Current Price on 28th Dec 2018 = S$0.335
- Yield = 8.77%
- Price-to-book Ratio = 0.434
- Assets per unit = $2.138
- Debt per unit = $1.366 (including current liabilities and non-controlling interest)
- Gearing = 63.9%
With 8.77%, it is yielding high although I think it is not high enough considering that it is a port trust rather than a real estate investment trust. Its price-to-book ratio is rerated to be 0.434 which means wer are buying at less than half the price even after re-rating. Including all other equities as liabilities in the balance sheet, we see a gearing of 63.9% which is extremely high. This is probably the reason why it is trading at a depressed price.
With the crash of APTT (which wiped out my earnings), many people are saying that HPH Trust is next. I won’t say so. The reason is that Port assets are still valuable, visible and more stable compared to pay tv business where it face fierce competition and probably will die down. Of course, I realize it too late and got burnt earlier. But I don’t think it is the case here. Port business is still relatively stable with high requirements. I think the problem is earnings margin which is very low. A small change in percentage of business is likely to have a large impact of its earnings. This one, we need to watch out.
I am holding on to 200,000 shares which gives me a yield of $500 per month. However, unless there is an upturn in the business, I don’t think there are any room for upside. Nevertheless, the yield is high enough for me to hold on for long term.
