Yuanta Reports

PPAP's 1Q17 review: earnings fall 8.3% YoY on rising depreciation expense

Container throughputs surge 22.3% YoY;

In 1Q17, container throughputs was the highest PPAP has ever handled during the first quarter of year, surging 22.3% YoY to 39,510 TEUs, resulting in a 12.8% YoY increase in container cargo volume to 308,153 tonnes. Meanwhile, general cargo continued to see a solid growth of 14.7% YoY, with 131,457 tonnes, reflecting increased popularity in the use of general cargo shipments. However, combined cargo volume rose only modestly by 4.5% to 626,103 tonnes as oil & gas cargo volume fell 11.8% compared to the same period last year. 

Top-line sees modest growth of 5.4% YoY as income from other sources declines

Total revenue in 1Q17 came to KHR16.54bn, up 5.4% YoY, vs 1Q16’s 10.1% YoY. The modest growth in total revenue was due to a sharp drop in revenue from other sources, while revenue from main sources continued to see robust growth thanks to rising cargo traffic. A breakdown of total revenue indicates that main sources of revenue including income from stevedoring, lift-on lift-off (LOLO), and port services rose 11.3% YoY, 9.4% YoY, and 6.6% YoY, respectively. However, the overall revenue growth was undermined by a 52.1% YoY drop in income from storage services and an 89.1% decline in income from sand dredging services. The sharp drop in income from storage services was because one of its important customers ceased using storage services at PPAP, while the decline in income from sand dredging can be attributed to fiercer competition from private firms that were granted permission to operate the same services.   

Operating profit down 4.6% YoY; margin squeezed

EBITDA saw an even modest growth in the first three months of 2017, edging up only 3.3% YoY to KHR8.27bn. Operating expense excluding depreciation increased 5.5% YoY, mainly driven by a 174.4% YoY jump in expense on fuel and gasoline as global oil prices recovered. Meanwhile, with depreciation expense soaring 22.1% YoY, EBIT fell 4.6% YoY to KHR5.38bn, and EBIT margin was squeezed by 3.4%pt YoY. Significant rise in depreciation expense was not surprising given the company’s post-IPO expansion.

Net profit falls 8.3% YoY

Pre-tax profit in the first quarter of 2017 dropped 7.4% YoY to KHR4.12bn, while net profit fell 8.3% YoY to KHR3.35bn. Despite total revenue continuing to grow, jump in expense on fuel and gasoline due to global oil price’s recovery and significant rise in depreciation expense as a result of the post-IPO expansion were main driving forces behind the decrease in net profit in 1Q17. 

Equity Report

08th June 2017

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