Hutchison Port Holdings (HPHTSP) is a port operator, whose assets includes deep water container terminals in the South China Pearl River delta. The bulk of earnings are derived from mainland China, with Shenzhen the main hub.
The ratings (Baa1/A-) have recently been affirmed by the agencies, with the expectation that metrics will remain strong and that the support of parent CK Hutchison (A2/A/A-) is intact.
In terms of our fair value estimate, we compare the 2 existing bonds (2026 maturities) to the curves of our 3 main peers. This includes PSA International (port management, cargo handling), CK Hutchison (parent) and SF Holdings (courier services, Shenzhen).
SF Holdings (A3/A-), rated one notch higher than Hutchison Port with Moody's, acts as a reasonable comparable in our view (similar rating, sector and region). We assume that Hutchison Port's lower rating is worth around 10bp in additional premium to the SF Holding curve and estimate a fair value, at the 5yr point, of z+105bp (T+75bp).
