Sailing smooth: a glimpse into Port Stocks—POT, NPH and SPN

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Sailing smooth: a glimpse into Port Stocks—POT, NPH and SPN

 Sailing smooth: a glimpse into Port Stocks—POT, NPH and SPN

Investors look for quality and momentum while investing in stocks. That's because good quality stocks tend to be durable and generate cash in long term. They may not perform that well in short term, but in long term, they are cash-generating and resilient companies. Some port companies fall in this category. They have strong fundamentals and sound growth plans.

Let’s look at some of these stocks

Port of Tauranga

Port of Tauranga Limited (NZX:POT) provides port and cargo handling services. It is one of largest ports and claims to handle 32% of all NZ cargo, 37% of NZ exports, and 41% of all shipping containers.

The Company came out well from COVID-19 pandemic due to the diversity of its income streams. It also focused on cost cutting and maintaining a strong balance sheet.

Despite complete restriction on movement globally, Port’s total cargo reflected only a 7.9% decrease over the previous year and was driven by a drop of almost 22% in export. Containerised cargo volumes increased 1.5% to 1.25 M TEUs for the year. Transhipments also remained strong.

NPAT was $90M as compared to the last year’s NZ$100.6 M. Revenue dipped 3.6% to NZ$302M, down from 313.3M of the last year. In the second half of the FY, the earnings were up 18.4% to 14.1 M.

The Port has also forged strong partnerships, which is another reason why the Company is attractive for  investors. POT has extended its partnership with Kotahi, the largest containerised freight exporter of NZ. Kotahi manages freight of 40 biggest exporters of NZ.

Port of Tauranga will continue to increase its capacity as well as berth extension.

On 5 February 2021, the stock closed at NZ$3.460.

Napier Port Holding Limited

Napier Port Holding Limited (NZX:NPH) is the oldest port and claims to be the fourth-largest port in terms of container volume in NZ.

Napier has been showing higher-than-expected trade volumes even during the pandemic. In Q1 ended 31 December 2020, led by log exports, NPH showed a growth of 8.2%.

Log export volumes was up 4.3% amid good export market conditions. Bulk import volumes were also strong as compared to the previous year.

However, total container volumes declined by 4%. While full container volumes increased 2.6%, other container volumes slumped by 11 per cent.

Read Also: What’s the reason for Napier Port’s (NZX:NPH) high trade volumes for Q1FY21?

Even for the whole year, the revenue was up, though only a marginal 0.8% to NZ$100.4M from NZ$99.6M. These numbers don’t reflect a complete drop in cruise activity and fall in container volumes.  

Overall, the Company’s performance was good, beating the COVID-19 blues. 

On 5 February 2021, the stock closed at NZ$3.460.

South Port New Zealand Limited

South Port New Zealand limited (NZX:SPN) is a deep-water port, situated in the southern-most tip of New Zealand. It offers a complete range of services.

SPN’s performance was also strong despite border restrictions. Its NPAT was NZ$9.43M, over NZ$9.79M 2019. Just a marginal decline, considering total cargo was down, reflected a 7.2% decline. Overall global volumes were down due to COVID-19 as well as softening of commodity prices.

IN SPN’s case, it were the log volumes that were impacted, but container and warehousing helped the Company offset for other downtrends in this financial year. 

Further growth with New Initiatives:

The Port has initiated some new things such as the Company is reviewing the entrance channels to improve safety margins for ship movements and capacity enhancement.

New Tug: SPN has also initiated the purchase of a new tug. Currently, the Company has two tugs. This will help the Company increase bollard pull capacity of the Port.

With the possibility of these two new initiatives, the Port is looking at further growth and development.

NZAS extension a big positive
The port stock is looking up as also the NEW Zealand Aluminium Smelter’s has been given an extension till 2024. It is a significant development for the port as NZAS contributed to 18-20% NPAT of the Port and approximately 18-20% of the cargo.

On 5 February 2021, the stock closed at NZ$8.580.



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