COSCO Pacific ends 3Q14 with 8.75% YoY growth

Overseas terminals grew the most.

COSCO Pacific's (CP) container throughput grew 7.8% YoY in September, closing 3Q14 with an 8.7% YoY growth.

According to a research report from Maybank Kim Eng, overseas terminals saw the best growth, up 20.3% in the quarter, while growth for China (excluding Hong Kong and Taiwan) is also healthy at 6.3%.

Major terminals that witnessed strong throughput growth are Yantian, Ningbo and Antwerp. Throughput for Xiamen increased

54.9% in 3Q14 and we anticipate this will contribute positively to further loss reduction at the project.

The new projects Asia Container Terminal in Hong Kong (acquired Mar 2014) and Taicang Container Terminal (acquired

Jul 2013) added 2.4ppts to throughput growth in 9M14. Excluding these projects, recurrent growth is also decent at 7.2%.

Here's more from Maybank Kim Eng:

Overall throughput growth is in line with our forecast of 8.8% for full-year FY14. The company guides that earnings growth for the port business should outperform the throughput growth for this year, partly due to the removal of tax impact and tariff discounts at several ports.

Meanwhile, the container leasing division has already bottomed out and it sees some signs of slow improvement.

We expect recurrent earnings growth of 8% for the full year; and will accelerate to 12% in FY15, as fuelled by ACT, Xiamen

and Antwerp.

CP trades at 11.2x FY15F PER, which is undemanding relative to its five-year range of 9-18x. Key catalysts for the share price are continued good throughput momentum, potential value-enhancing acquisitions and loss reduction at Xiamen.

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