Staying afloat in turbulent times
With average dividend yields of more than 10% over the past few years, and a business model that is only likely to be marginally impacted by the economic downturn, Bintulu Port Holdings Bhd easily qualifies as an investor favourite in turbulent times.
With its mainstay in the handling of liquefied natural gas (LNG), Bintulu Port's earnings are likely to remain resilient and largely unaffected by the weak global economic climate.
In 2007, LNG cargoes amounted to about 78% of operating revenue and accounted for about 59% of cargo throughput.
Thus, while the economic downturn might impact Bintulu Port's container and bulk operations, the LNG operations are unlikely to feel the crunch.
With Petroliam Nasional Bhd (Petronas) controlling some 32.8% of Bintulu Port's equity and an additional 2.6% parked under its shipping unit MISC Bhd, there is unlikely to be any drastic change in the current scenario.
Malaysia LNG Sdn Bhd (MLNG), the LNG manufacturer located at Bintulu Port, has long-term contracts to supply gas to Japan, South Korea and Taiwan, among others, which will ensure that Bintulu Port gets a steady stream of ship calls.
It is also likely that MLNG, a unit of Petronas, will step up its LNG production capacity, which in turn will translate to more revenue for Bintulu Port.
For the nine months ended Sept 30, 2008, Bintulu Port posted a net profit of RM117 million on the back of RM333.3 million in revenue. In contrast to a year ago, net profit improved by 3.3% while revenue inched up 7.4%.
It is also noteworthy that with Bintulu Port's cash hoard of RM494.3 million and trade receivables of about RM30.3 million as at end-September 2008, a capital repayment or special dividend payment cannot be ruled out.
With these possibilities, it is not surprising that Bintulu Port's stock has performed quite well amidst the financial turmoil. Year to date, the company's shares have fallen only 7% and outperformed the benchmark Kuala Lumpur Composite Index by about 35%.
