Hutch to use IPO funds for port expansion
John Meredith, managing director of Hutchison Port Holdings, reckons that ports are ideal assets for a business trust and added that Hutchison would use the funds to be raised by the business trust IPO in Singapore to expand ports agressively.
"We are chasing ports in four countries," Meredith says. "Some are completely greenfield, where you have to go in and dredge and reclaim the land. Others are semi-built and just require modernisation — new equipment, new systems — and, structurally, the port is there."
"Even in a downturn, the port industry did not suffer anything like the shipping companies did," he said, during a press conference, reported The Edge.
"Ports are very resilient. They can take a lot of knocks. In the 40 years we've been operating, we've never had a year in which it's been negative growth — except in 2009, and it recovered very quickly."
Hutchison Port Holdings is part of Hong Kong billionaire Li Ka-shing's Hutchison Whampoa group, which said last month that it planned to spin off its existing and future deep-water container ports in Guangdong, Hong Kong and Macau into a Singapore-listed business trust. The IPO is expected to raise some US$6 billion, a record for the Singapore market. Hutchison Whampoa will retain a 25 percent interest in the trust.
With no listing documents filed yet, however, Meredith was unable to offer any further information on the upcoming IPO. But he had plenty to say about Hutchison Port Holdings, the largest port operator in the world, with an annual throughput of 65.3 million TEUs.
"You have something physical where you can go and kick the tyres. You have a hard asset, and it's a good industry," he says, adding that the company's main assets are in Hong Kong, Guangdong and Panama.
So, why is Hutchison Port Holdings planning to spin off some of its key assets? For one thing, building a port is an expensive exercise, frequently costing up to $1 billion. And, the company is in expansion mode now.
Besides requiring large amounts of cash to build, developing a new port often gets bogged down in governmental and legal issues, underscoring the need for an amply capitalised balance sheet. Meredith cites his company's efforts to expand in Mexico as an example.
"We gave some of our managers an exercise of finding a location in Mexico that could be linked by rail to the [US border]," he says, adding that the new port would be an alternative to Los Angeles. "Unfortunately, the negotiations became mired in legality. We called it Project Thomas, after Thomas the tank engine. It would have been $5 billion and a joint venture with the US."
Meredith says the project is still pending. Hutchison Ports Holdings already operates four ports in Mexico.
Apart from investing in new ports, Meredith is also focused on organic growth. "Every year, we increase our capacity without [adding] a location," he says. That involves investment in modern equipment to make its ports more productive.
"We buy new systems — GPS, advanced computer systems. We are the world's largest purchaser of marine dock equipment. Those cranes you see down at PSA, we actually have 500 of those around the world." Meredith says the size of its purchases enables it to get a better deal on port equipment than most other port operators.
Hutchison Port Holdings has interests in 51 ports across 25 countries. But, its assets closer to home will be of most interest to investors awaiting the listing of its new business trust.
In Hong Kong, the company operates Hong Kong International Terminals — owner and operator of Terminals 4, 6, 7 and two berths in Terminal 9 at Kwai Tsing in Hong Kong — as well as Cosco-HIT, owner and operator of Terminal 8 East, also at Kwai Tsing. In 2005, PSA International bought a 20 percent stake in both HIT and Cosco-HIT for US$925 million. That's likely to see PSA becoming a key investor in the new business trust.
Monday, February 14, 2011
Sunday, February 13, 2011
PORT FEASIBILITY STUDIES
Kuantan Port City can attract RM38bil investments by 2020
KUALA LUMPUR: Kuantan Port City (KPC) is projected to attract up to RM38bil investments by 2020, and help the East Coast Economic Region (ECER) and the country’s first Special Economic Zone located within it, to be an industrial and logistics hub.
The ECER encompasses Kelantan, Terengganu and Pahang as well as the Mersing district in Johor.
KPC forms one of the main components of the development corridor. Encompassing 12,667ha, the completed project will see a throughput of 24 million tonnes, create 44,785 jobs and contribute RM9.3bil to the local economy by 2020.
According to a shipping analyst, KPC projects would certainly transform Kuantan Port into a mega port as the development calls for the expansion of Kuantan Port.
He said feasibility studies had been completed. “With new port facilities, it will enable the port to receive vessels above 40,000 tonnes or the next generation of container ships,” he said.
The analyst said KPC’s integrated development would also result in petrochemical, palm oil, automotive, container markets, as well as a major industrial and manufacturing zone serving the entire Asia-Pacific region.
He said KPC would also be the site for a Palm Oil Industrial Cluster (POIC) with one of its manufacturing components specialising in the downstream palm oil industry and the petrochemical cluster. Construction work at the POIC began in September last year. “The port city will improve the income and skills of the population while providing them with convenient and safe access to modern and efficient facilities and infrastructure,” the analyst said.
The Integrated Master Plan for KPC has been finalised and was handed over to the Kuantan Municipal Council last year.
Meanwhile, improvements in KPC’s main infrastructure, such as roads and drainage system, commenced this year.
To improve the water quality in KPC, a two-km water pipeline in Gebeng was completed and was handed over to the Pahang Water Supply Department in March last year. Land clearing and survey works for the construction of Panching Water Treatment Plant, are ongoing.
Once completed, the water treatment plant will have a capacity of 160 million litres per day, which will ensure adequate water supply, particularly in the Gebeng area.
To serve KPC, a multimodal network of highways, roads, railway and airports will move people and goods between KPC and the hinterland or the industrial clusters.
A logistics and distribution centre located near the port will also substantially improve the handling of goods.
KPC covers the existing Gebeng industrial area and Kuantan Port, up to the Mardi Institute in the north and the Pahang border in the west. — Bernama
KUALA LUMPUR: Kuantan Port City (KPC) is projected to attract up to RM38bil investments by 2020, and help the East Coast Economic Region (ECER) and the country’s first Special Economic Zone located within it, to be an industrial and logistics hub.
The ECER encompasses Kelantan, Terengganu and Pahang as well as the Mersing district in Johor.
KPC forms one of the main components of the development corridor. Encompassing 12,667ha, the completed project will see a throughput of 24 million tonnes, create 44,785 jobs and contribute RM9.3bil to the local economy by 2020.
According to a shipping analyst, KPC projects would certainly transform Kuantan Port into a mega port as the development calls for the expansion of Kuantan Port.
He said feasibility studies had been completed. “With new port facilities, it will enable the port to receive vessels above 40,000 tonnes or the next generation of container ships,” he said.
The analyst said KPC’s integrated development would also result in petrochemical, palm oil, automotive, container markets, as well as a major industrial and manufacturing zone serving the entire Asia-Pacific region.
He said KPC would also be the site for a Palm Oil Industrial Cluster (POIC) with one of its manufacturing components specialising in the downstream palm oil industry and the petrochemical cluster. Construction work at the POIC began in September last year. “The port city will improve the income and skills of the population while providing them with convenient and safe access to modern and efficient facilities and infrastructure,” the analyst said.
The Integrated Master Plan for KPC has been finalised and was handed over to the Kuantan Municipal Council last year.
Meanwhile, improvements in KPC’s main infrastructure, such as roads and drainage system, commenced this year.
To improve the water quality in KPC, a two-km water pipeline in Gebeng was completed and was handed over to the Pahang Water Supply Department in March last year. Land clearing and survey works for the construction of Panching Water Treatment Plant, are ongoing.
Once completed, the water treatment plant will have a capacity of 160 million litres per day, which will ensure adequate water supply, particularly in the Gebeng area.
To serve KPC, a multimodal network of highways, roads, railway and airports will move people and goods between KPC and the hinterland or the industrial clusters.
A logistics and distribution centre located near the port will also substantially improve the handling of goods.
KPC covers the existing Gebeng industrial area and Kuantan Port, up to the Mardi Institute in the north and the Pahang border in the west. — Bernama
SHIPPING-CONTAINER TRADE
Monday January 31, 2011
Delicate outlook for container, dry bulk
By SHARIDAN M. ALI
sharidan@thestar.com.my
PETALING JAYA: Container and dry-bulk shipping sectors in the Asia-Pacific are still facing uncertain times.
Slower demand from Europe and a stream of newbuildings that was anticipated to enter the market this year were factors impinging on the container shipping sector, said investment banking group Nomura International (HK) Ltd in a report recently.
Meanwhile, the dry-bulk sector continued to suffer from oversupply of vessels, and was currently hampered by low freight rates due to the recent floods in Australia, it said.
Nomura remains cautious on the container shipping sector as demand growth in Europe is set to be slower than that in the United States.
The key earnings driver would be the Asia-to-Europe routes, which experienced higher margins and profitability last year.
“Supply of vessels is likely to be focused on those exceeding 10,000-TEUs (twenty-foot equivalent units).
“The order book is skewed towards this segment, which accounts for 45%. The supply of vessels of this size is set to grow by 98% this year,” it said.
However, Nomura said port and route limitations were preventing these large vessels from operating on many Asia-to-US routes.
“Carriers also face cost pressures from higher bunker oil prices and terminal-handling charges, primarily from Chinese ports,” it said.
Nomura estimates that Asia-to-Europe freight rates would drop by 4% this year while trans-Pacific freight rates would increase 1% despite the fact that annual contracts, for which negotiation usually ends in May, are likely to be concluded marginally lower this year.
“The main reason for these diverging freight rates is the way the routes are structured, mainly on a quarterly basis for the Asia-to-Europe routes and annually for the trans-Pacific routes.
“We also estimate that Asia-to-Europe routes would have higher spot contracts and a greater percentage of freight forwarders on the European routes than end-users on the US routes,” it said.
For dry-bulk shipping, Nomura said oversupply, slower demand and inflation concerns continued to plague the outlook for sector.
“While we believe these are valid concerns, we estimate that current freight rates are at artificially low levels due to bad weather and flooding problems in Australia,” it said.
With iron ore and coal each accounting for 30% and 27% of total volumes, Australia is a key export region of the raw materials, given that the continent is the largest exporter of iron-ore and second-largest of thermal coal globally.
“Once the Australian flooding problem eases, we expect a rebound in freight rates, although this will still be lower than historical highs, given the problem with the supply of vessels,” it added.
Nomura said supply growth remained a concern for the sector. Despite record newbuilding deliveries last year, orderbook as a percentage of current fleet remains at 52%.
“We estimate net supply growth of 11.3% in 2011 and 2012 respectively, after factoring in a 42% newbuilding delivery slippages in both years.
“This is higher than in 2010 with newbuilding slippage of 36% due to lower freight rates this year and 2012,” it said, adding that scrapping was the wild card, given that 31% of the existing fleet was over 20 years old.
Newbuilding delivery slippages refers to new vessels that do not enter the market.
Nevertheless, Nomura remained relatively optimistic that demand for iron ore and coal (thermal and coking) would remain strong.
Delicate outlook for container, dry bulk
By SHARIDAN M. ALI
sharidan@thestar.com.my
PETALING JAYA: Container and dry-bulk shipping sectors in the Asia-Pacific are still facing uncertain times.
Slower demand from Europe and a stream of newbuildings that was anticipated to enter the market this year were factors impinging on the container shipping sector, said investment banking group Nomura International (HK) Ltd in a report recently.
Meanwhile, the dry-bulk sector continued to suffer from oversupply of vessels, and was currently hampered by low freight rates due to the recent floods in Australia, it said.
Nomura remains cautious on the container shipping sector as demand growth in Europe is set to be slower than that in the United States.
The key earnings driver would be the Asia-to-Europe routes, which experienced higher margins and profitability last year.
“Supply of vessels is likely to be focused on those exceeding 10,000-TEUs (twenty-foot equivalent units).
“The order book is skewed towards this segment, which accounts for 45%. The supply of vessels of this size is set to grow by 98% this year,” it said.
However, Nomura said port and route limitations were preventing these large vessels from operating on many Asia-to-US routes.
“Carriers also face cost pressures from higher bunker oil prices and terminal-handling charges, primarily from Chinese ports,” it said.
Nomura estimates that Asia-to-Europe freight rates would drop by 4% this year while trans-Pacific freight rates would increase 1% despite the fact that annual contracts, for which negotiation usually ends in May, are likely to be concluded marginally lower this year.
“The main reason for these diverging freight rates is the way the routes are structured, mainly on a quarterly basis for the Asia-to-Europe routes and annually for the trans-Pacific routes.
“We also estimate that Asia-to-Europe routes would have higher spot contracts and a greater percentage of freight forwarders on the European routes than end-users on the US routes,” it said.
For dry-bulk shipping, Nomura said oversupply, slower demand and inflation concerns continued to plague the outlook for sector.
“While we believe these are valid concerns, we estimate that current freight rates are at artificially low levels due to bad weather and flooding problems in Australia,” it said.
With iron ore and coal each accounting for 30% and 27% of total volumes, Australia is a key export region of the raw materials, given that the continent is the largest exporter of iron-ore and second-largest of thermal coal globally.
“Once the Australian flooding problem eases, we expect a rebound in freight rates, although this will still be lower than historical highs, given the problem with the supply of vessels,” it added.
Nomura said supply growth remained a concern for the sector. Despite record newbuilding deliveries last year, orderbook as a percentage of current fleet remains at 52%.
“We estimate net supply growth of 11.3% in 2011 and 2012 respectively, after factoring in a 42% newbuilding delivery slippages in both years.
“This is higher than in 2010 with newbuilding slippage of 36% due to lower freight rates this year and 2012,” it said, adding that scrapping was the wild card, given that 31% of the existing fleet was over 20 years old.
Newbuilding delivery slippages refers to new vessels that do not enter the market.
Nevertheless, Nomura remained relatively optimistic that demand for iron ore and coal (thermal and coking) would remain strong.
Friday, October 15, 2010
BUDGET 2011 FEEDBACKS
DATUK SERI TONY FERNANDES
AirAsia Bhd
Group CEO
I AM thrilled about the Mass Rapid Transit (MRT) in Greater KL. This is something long overdue. People do not realise the significant loss in productivity to be sitting in traffic jams. Hopefully, with the MRT, this problem will be alleviated.
It is critical to cover the whole of KL and I hope that the railways will continue to be developed. It would be fantastic if KTM is linked to KL International Airport as that could spur tourism along the entire KTM network stretching from north to south. Along the way, there are many tourism projects and the linkages can only benefit the rural economy tremendously.
I am happy that talent is being put to the forefront. We should try to bring back our talent from abroad. For that to happen, we must be prepared to compete with the best in the world.
AirAsia Bhd
Group CEO
I AM thrilled about the Mass Rapid Transit (MRT) in Greater KL. This is something long overdue. People do not realise the significant loss in productivity to be sitting in traffic jams. Hopefully, with the MRT, this problem will be alleviated.
It is critical to cover the whole of KL and I hope that the railways will continue to be developed. It would be fantastic if KTM is linked to KL International Airport as that could spur tourism along the entire KTM network stretching from north to south. Along the way, there are many tourism projects and the linkages can only benefit the rural economy tremendously.
I am happy that talent is being put to the forefront. We should try to bring back our talent from abroad. For that to happen, we must be prepared to compete with the best in the world.
Wednesday, October 13, 2010
Airline Industry Into Better Times
Surge in US airline passenger loads require pilots
Malaysia Sun
Wednesday 13th October, 2010
US pilots, who have been out of work, sometimes for many months, are about to find themselves back in the chair.
US pilots, who have been out of work, sometimes for many months, are about to find themselves back in the chair.
A passenger surge by Delta and AirTran has foreshadowed mass pilot hirings by the airline industry.
Delta and AirTran, which began recruiting again earlier this year, found that there were many pilots willing to step out of unemployment lines.
AirTran claimed it had received more than 3,000 applications when it started hiring pilots again in February.
Analysts in the US have suggested the oversupply of pilots is temporary with the industry now looking for experienced staff.
Delta announced plans to hire about 300 pilots this year, while AirTran said it would take in about 160 new staff.
Malaysia Sun
Wednesday 13th October, 2010
US pilots, who have been out of work, sometimes for many months, are about to find themselves back in the chair.
US pilots, who have been out of work, sometimes for many months, are about to find themselves back in the chair.
A passenger surge by Delta and AirTran has foreshadowed mass pilot hirings by the airline industry.
Delta and AirTran, which began recruiting again earlier this year, found that there were many pilots willing to step out of unemployment lines.
AirTran claimed it had received more than 3,000 applications when it started hiring pilots again in February.
Analysts in the US have suggested the oversupply of pilots is temporary with the industry now looking for experienced staff.
Delta announced plans to hire about 300 pilots this year, while AirTran said it would take in about 160 new staff.
Road Transport Bill
KUALA LUMPUR: The Road Transport (Amendment) Bill 2010, which was earlier revoked, was again tabled for second reading at the Dewan Rakyat on Wednesday, Oct 13.
Transport Minister Datuk Seri Kong Cho Ha said the bill was tabled again after the ministry had updated the suggestions submitted following feedback received from various quarters including the Barisan Nasional Backbenchers Club (BNBBC).
Kong said the bill originally involved 63 sections and sub-sections of which 31 had been accepted without objection while the rest received feedback from various quarters.
"In updating the Road Transport Act 1987 (Act 333), the government had studied and considered the views received in the interest of the people, four proposed amendments (from the previous bill) are among those that had been dropped," he said in a statement here.
The four proposed amendments that had been dropped were the increase in the age limit for applicants of a motorcycle licence from 16 to 17 years old, the maximum compound raised from RM300 to RM1,000, the three-month validity period for a Motor Vehicle Licence (LKM) for repeat offenders, and the control on the issuance of vehicle registration number plates by the Director-General of the Road Transport Department.
On April 21, the government retracted the bill which was tabled for the first reading which contained 51 Articles proposed for amendments.
Deputy Transport Minister Datuk Rahim Bakri tabled the bill which contained 47 Articles. — Bernama
Transport Minister Datuk Seri Kong Cho Ha said the bill was tabled again after the ministry had updated the suggestions submitted following feedback received from various quarters including the Barisan Nasional Backbenchers Club (BNBBC).
Kong said the bill originally involved 63 sections and sub-sections of which 31 had been accepted without objection while the rest received feedback from various quarters.
"In updating the Road Transport Act 1987 (Act 333), the government had studied and considered the views received in the interest of the people, four proposed amendments (from the previous bill) are among those that had been dropped," he said in a statement here.
The four proposed amendments that had been dropped were the increase in the age limit for applicants of a motorcycle licence from 16 to 17 years old, the maximum compound raised from RM300 to RM1,000, the three-month validity period for a Motor Vehicle Licence (LKM) for repeat offenders, and the control on the issuance of vehicle registration number plates by the Director-General of the Road Transport Department.
On April 21, the government retracted the bill which was tabled for the first reading which contained 51 Articles proposed for amendments.
Deputy Transport Minister Datuk Rahim Bakri tabled the bill which contained 47 Articles. — Bernama
Friday, July 9, 2010
PORT NEWS AROUND THE WORLD
| Sri Lanka port terminal concession finalised A deal to build a container terminal in an expanded Colombo port will be awarded to a China-Sri Lanka consortium within 'two to three weeks' according to Treasury Secretary P B Jayasundera, Lanka Business Online reported. "Right now we are about to issue an LOI (letter of intent) on the development for Colombo port," Jayasundera said. "The concession agreement has been finalised." Sri Lanka Ports Authority has been haggling with the sole bidder to raise royalties paid under the concession agreement for the last year. A team from China Merchant Holding is now in the country and awaiting legal clearance of the concession agreement, sources close to the deal said. Jayasundera told LBO the deal is likely to be awarded within two to three weeks. Analysts say terminal is likely to cost around US$500 million. The government itself is investing around $380 million to build a breakwater and expand Colombo port, which straddles an East-West shipping lane across the Indian Ocean. The expanded breakwater has space for multiple terminals which can be built over several years. |
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