Company Reports

Port of Tauranga is the largest port in New Zealand, handling significantly more cargo than its nearest competitor. It has been voted as the most efficient container port in Australasia by the Ministry of Transport and Australian Productivity Commission. The firm's high productivity levels, low cost structure, sizable land bank, excellent rail connectivity to Auckland, and nonunionized workforce give it a considerable competitive advantage and a wide economic moat. Log and forestry products make up a significant chunk of bulk cargo and are leveraged to growth in China and the rest of Asia. Container cargo is driven by dairy exports and merchandise imports, and accounts for approximately half the total trade through the port.

Wide-moat-rated Port of Tauranga had a challenging first half fiscal 2024, with net profit after tax down 25% to NZD 47 million because of lower trade volumes and higher operating costs. Full-year NPAT guidance of NZD 95 million-NZD 107 million is maintained, representing a 14% drop from last year at the midpoint. We reiterate our NZD 5 per share fair value estimate with our forecasts broadly unchanged. The stock has fallen 30% from the 2020 peak and now screens as fairly valued.

After a dismal first quarter, management provided guidance for net profit after tax of NZD 95 to 107 million in fiscal 2024, down 14% on last year at the midpoint. We were previously expecting wide-moat Port of Tauranga to generate broadly flat earnings in fiscal 2024. We downgrade our fiscal 2024 NPAT forecast by 13% to NZD 103 million and pare back medium-term forecasts as well. We trim our fair value estimate by 4% to NZD 5 per share.

Port of Tauranga is the largest port in New Zealand, handling significantly more cargo than its nearest competitor. It has been voted as the most efficient container port in Australasia by the Ministry of Transport and Australian Productivity Commission. The firm's high productivity levels, low cost structure, sizable land bank, excellent rail connectivity to Auckland, and nonunionized workforce give it a considerable competitive advantage and a wide economic moat. Log and forestry products make up a significant chunk of bulk cargo and are leveraged to growth in China and the rest of Asia. Container cargo is driven by dairy exports and merchandise imports, and accounts for approximately half the total trade through the port.

Port of Tauranga is the largest port in New Zealand, handling significantly more cargo than its nearest competitor. It has been voted as the most efficient container port in Australasia by the Ministry of Transport and Australian Productivity Commission. The firm's high productivity levels, low cost structure, sizable land bank, excellent rail connectivity to Auckland, and nonunionized workforce give it a considerable competitive advantage and a wide economic moat. Log and forestry products make up a significant chunk of bulk cargo and are leveraged to growth in China and the rest of Asia. Container cargo is driven by dairy exports and merchandise imports, and accounts for approximately half the total trade through the port.

We raise our fair value estimate for wide-moat Port of Tauranga 3% to NZD 4.45 on the time value money and upgraded near-term earnings forecasts. Port of Tauranga upgraded fiscal 2021 NPAT guidance to NZD 94 to 100 million from NZD 86 to 93 million as trade conditions improve quicker than management previously expected. The midpoint of guidance is 3% higher than fiscal 2020 NPAT. We upgrade our fiscal 2021 NPAT forecast 7% to NZD 97 million but our long-term expectations remain largely unchanged. Shares remain materially overvalued relative to our fair value estimate, currently trading at a forward fiscal 2021 enterprise value/EBITDA of 31 and offering a paltry dividend yield of 1.7%, fully imputed. Port of Tauranga is a good quality company with a long growth runway. But the market price is too lofty in our opinion.

Port of Tauranga is the largest port in New Zealand, handling significantly more cargo than its nearest competitor. It has been voted as the most efficient container port in Australasia by the Ministry of Transport and Australian Productivity Commission. The firm's high productivity levels, low cost structure, sizable land bank, excellent rail connectivity to Auckland, and nonunionised workforce give it a considerable competitive advantage and a wide economic moat. Log and forestry products make up a significant chunk of bulk cargo and are leveraged to growth in China and the rest of Asia. Container cargo is driven by dairy exports and merchandise imports, and accounts for approximately half the total trade through the port.

Port of Tauranga is the largest port in New Zealand, handling significantly more cargo than its nearest competitor. It has been voted as the most efficient container port in Australasia by the Ministry of Transport and Australian Productivity Commission. The firm's high productivity levels, low cost structure, sizable land bank, excellent rail connectivity to Auckland, and nonunionised workforce give it a considerable competitive advantage and a wide economic moat. Log and forestry products make up a significant chunk of bulk cargo and are leveraged to growth in China and the rest of Asia. Container cargo is driven by dairy exports and merchandise imports, and accounts for approximately half the total trade through the port.

We maintain our earnings forecasts and fair value estimate of NZD 15.00 per share for Port of Tauranga. We expect underlying net profit after tax, or NPAT, will be flat in fiscal 2015 as the gain in containers will be offset by weakness in logs. We expect log volumes to decline by double digits in fiscal 2015 resulting from a material slowdown in China. Container trade through the port is expected to grow by 13.5% on the back of increased dairy shipments and higher imports. In the longer term, container volumes are forecast to rise by about 7% per annum. This will be driven by dairy shipments reflecting Port of Tauranga's 10-year agreement with Fonterra's logistics provider Kotahi and higher transhipments given the arrival of bigger container ships in the order of 7,000 twenty-foot equivalent units, or TEUs, versus 4,000 to 5,000 TEUs. The dredging program currently being undertaken and due to be completed in fiscal 2017 will make Port of Tauranga the only port in New Zealand capable of handling bigger ships.

Port of Tauranga is the largest port in New Zealand, handling significantly more cargo than its nearest competitor. It has been voted as the most efficient container port in Australasia by the Ministry of Transport and Australian Productivity Commission. The firm's high productivity levels, low-cost structure, sizeable land bank, excellent rail connectivity to Auckland and a nonunionized workforce give it a considerable competitive advantage and a wide economic moat. Log and forestry products make up a significant chunk of bulk cargo and are leveraged to growth in China and the rest of Asia. Container cargo is driven by dairy exports and merchandise imports and accounts for approximately half the total trade through the port.

Port of Tauranga is the largest port in New Zealand, handling significantly more cargo than its nearest competitor. It has been voted as the most efficient container port in Australasia by the Ministry of Transport and Australian Productivity Commission. The firm's high productivity levels, low-cost structure, sizeable land bank, excellent rail connectivity to Auckland and a nonunionized workforce give it a considerable competitive advantage and a wide economic moat. Log and forestry products make up a significant chunk of bulk cargo and are leveraged to growth in China and the rest of Asia. Container cargo is driven by dairy exports and merchandise imports and accounts for approximately half the total trade through the port.

Port of Tauranga or POT's underlying net profit after tax or NPAT was down 2% for the first half fiscal 2015 to NZD 38.5 million. This was in line with our expectations as stronger container volumes were offset by a reduction in log exports through the port. Consequently, total trade through the port at 10 million tons during the half was flat versus prior year. Associate companies also reported flat results with the rise in Northport's and Port Timaru's NPAT being offset by lower earnings from Quality Marshalling.

Port of Tauranga is the largest port in New Zealand, handling significantly more cargo than its nearest competitor. It has been voted as the most efficient container port in Australasia by the Ministry of Transport and Australian Productivity Commission. The firm's high productivity levels, low-cost structure, sizeable land bank, excellent rail connectivity to Auckland and a nonunionized workforce give it a considerable competitive advantage and a wide economic moat. Log and forestry products make up a significant chunk of bulk cargo and are leveraged to growth in China and the rest of Asia. Container cargo is driven by dairy exports and merchandise imports and accounts for approximately half the total trade through the port.

We have trimmed our near term forecasts for the Port of Tauranga, or POT, in light of management's guidance at the annual general meeting. The company expects underlying net profit after tax, or NPAT, to come in between NZD 78 million and NZD 83 million, or flat, versus the prior period. Our fair value estimate for POT stands at NZD 15.00 per share, as we have not made any changes to our longer term forecasts. We like POT’s business model and its strong competitive advantages which gives it a wide economic moat. However we think the stock is modestly overvalued compared to our intrinsic value and would advocate a better entry point before initiating a position in the stock.

Port of Tauranga is the largest port in New Zealand handling significantly more cargo than its nearest competitor. It has been voted as the most efficient container port in Australasia by the Ministry of Transport and Australian Productivity Commission. The firm's high productivity levels, low cost structure, sizeable land bank, excellent rail connectivity to Auckland and a non-unionized workforce gives it a considerable competitive advantage and a wide economic moat. Log and forestry products make up a significant chunk of bulk cargo and are leveraged to growth in China and the rest of Asia. Container cargo is driven by dairy exports and merchandise imports and accounts for approximately half the total trade through the port.

Port of Tauranga, or POT, posted underlying net profit after tax, or NPAT, of NZD 78.3 million, in line with our estimate. The result was flat versus the prior period. The core ports business posted flat earnings as higher income from logs was offset by lower container income. Subsidiary and associate companies achieved some growth with Northport and Tapper Transport the star performers, the latter benefiting from an acquisition.

We lift our fair value estimate for Port of Tauranga to NZD 14.00 per share from NZD 13.00 per share following the recent alliance struck by the company with freight and logistics management company Kotahi. In our view, the alliance will result in higher revenues and earnings for the company driven by increased dairy shipments through the port. We have revised our longer-term forecasts to reflect the increase in dairy volumes once bigger ships start calling at Port of Tauranga. Our 2014 and 2015 forecasts remain broadly intact.

Port of Tauranga is the largest port in New Zealand handling significantly more cargo than its nearest competitor. It has been voted as the most efficient container port in Australasia by the Ministry of Transport and Australian Productivity Commission. The firm's high productivity levels, low cost structure, sizeable land bank, excellent rail connectivity to Auckland and a non-unionized workforce gives it a considerable competitive advantage and a wide economic moat. Log and forestry products make up a significant chunk of bulk cargo and are leveraged to growth in China and the rest of Asia. Container cargo is driven by dairy exports and merchandise imports and accounts for approximately half the total trade through the port.

Port of Tauranga is the largest port in New Zealand handling significantly more cargo than its nearest competitor. It has been voted as the most efficient container port in Australasia by the Ministry of Transport and Australian Productivity Commission. The firm's high productivity levels, low cost structure, sizeable land bank, excellent rail connectivity to Auckland and a non-unionized workforce gives it a considerable competitive advantage and a wide economic moat. Log and forestry products make up a significant chunk of bulk cargo and are leveraged to growth in China and the rest of Asia. Container cargo is driven by dairy exports and merchandise imports and accounts for approximately half the total trade through the port.

We maintain our projections and fair value estimate of NZD 13.00 per share for Port of Tauranga. Modest growth in net profit after tax, or NPAT, is likely in fiscal 2014, driven mainly by acquisitions, whose benefits will show up on the bottom line during the year's second half. Log shipments are expected to show strong gains, driven by growth in exports to China. However container volumes are anticipated to be soft due to the movement of Maersk to rival Ports of Auckland on 1 July 2013. Associate and subsidiary company profits are expected to be slightly lower because of lower earnings from Quality Marshalling. The firm’s rental business is projected to show robust growth due to land acquisitions near the port, and the Metroport Terminal in Auckland.