NPH - Napier Port Holdings

[snapiti]

Snapiti

3rd quarter activities down heaps ...about 30% v pcp

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NPH/414513/398258.pdf

yep....no surprise....this port relies highly on forestry which is notorious for boom and bust cycles.
Given pan pac is still closed and the log price is still low(lots of harvest crews on the side lines) the next 1/4 V PCP will be fairly aweful as well.   SP not reacted to the numbers but I still see plenty of downside pressure as it trades at very high multiples given the risks

[snapiti]

all time low hit this week....no surprise

[Ferg]

Good on them for keeping the market informed.  This 9 month trading update was released mid August:
https://www.nzx.com/announcements/416401

Terrible quarter given the cyclone impact plus the economic downturn.

They expected the rail line to Hastings to open mid September - I don't know if it is fully open but I saw a single tender testing the line south of Awatoto earlier this week and a truck using the line closer to Napier today.  And whilst PanPac are shifting logs, I don't think their Whirinaki site has reopened yet.
https://www.panpac.co.nz/news/

Still hard to see growth.  Preserving cash will be key.  NZX50 inclusion may be a pipe dream and IPO investors are under water which IMO will put a cap on any price appreciation.

EDIT: Napier Hastings line to reopen on Friday. And the Napier Gisborne line is not being closed, it is being 'mothballed'.

[Hectorplains]

Good on them for keeping the market informed.  This 9 month trading update was released mid August:
https://www.nzx.com/announcements/416401

Terrible quarter given the cyclone impact plus the economic downturn.

They expected the rail line to Hastings to open mid September - I don't know if it is fully open but I saw a single tender testing the line south of Awatoto earlier this week and a truck using the line closer to Napier today.  And whilst PanPac are shifting logs, I don't think their Whirinaki site has reopened yet.
https://www.panpac.co.nz/news/

Still hard to see growth.  Preserving cash will be key.  NZX50 inclusion may be a pipe dream and IPO investors are under water which IMO will put a cap on any price appreciation.

EDIT: Napier Hastings line to reopen on Friday. And the Napier Gisborne line is not being closed, it is being 'mothballed'.

I think they're being unduly optimistic. The forestry situation is down played by NPH.   This headline captures where the industry is really at. 

[Ferg]

Full year volumes do not look good relative to last year.  Source: https://www.nzx.com/announcements/419815

Lower volumes are to be expected given Cyclone Gabrielle, but could we see a loss for H2?  And the dividend suspended?

[Ferg]

Lower volumes are to be expected given Cyclone Gabrielle, but could we see a loss for H2?  And the dividend suspended?

NPH Shareholders breathe a collective sign of relief: loss avoided and dividend not suspended.

Results announcement: https://www.nzx.com/announcements/421575

Sales for the last 4 half years (1H22, 2H22, 1H23, 2H23): $51m, $64m, $62m, $56m!
EBITDA last 4 half years: $16.4m, $23.7m, $21.9m, $15.3m!
NPAT last 4 half years: $9.0m, $11.4m, $8.7m, $7.9m*

*Note: NPAT for 2H23 includes Cyclone Gabrielle insurance claim of $7.25m pre-tax ($5.22m post tax).  So the trading NPAT for 2H23 was $2.7m.  Phew!

Note that FY22 included capitalised interest of $5.6m pre-tax ($4m post tax) which did not re-occur in FY23.  Plus FY23 had higher depreciation charges for the new wharf which also explains some of the fall in NPAT YoY.

Operating costs have stabilised, operating cashflow is positive and growing, FCF is also positive.

I'm not seeing an investment case (yet) but I am still watching.  NPH need log volumes to return but even if they return, this continues to be a risk given it is such a large proportion of their volumes (55% of total tonnage in FY23).

[SuperMario]

Consensus (1 analyst) of a $3.05 target https://www.marketscreener.com/quote/stock/NAPIER-PORT-HOLDINGS-LIMI-103506280/consensus/

[Hectorplains]

Consensus (1 analyst) of a $3.05 target https://www.marketscreener.com/quote/stock/NAPIER-PORT-HOLDINGS-LIMI-103506280/consensus/

A consensus of one?  That sounds like my wife...

[Hectorplains]

I'm not seeing an investment case (yet) but I am still watching.  NPH need log volumes to return but even if they return, this continues to be a risk given it is such a large proportion of their volumes (55% of total tonnage in FY23).

Log prices have got worse in the last six months since this post.  There was a big drop in April that, against expectations, continued into May.   Prices are at $106/JAS level for A-grade logs.  Exchange rates with China and shipping costs have been unfavorable too making an unholy trinity for log volumes.  There are no signs of significant turnaround for Chinese log demand.

I wonder what calculations the analyst is running for a 20% climb in share price?

[Basil]

I had a look at that this morning.  They are predicting $24m NPAT which based on the company's recent half year result and forward guidance looks quite unlikely to me.  I think ~ $20m is where its more likely to be. That analyst is forecasting much stronger growth in FY25 and FY26, based on what exactly I am not sure, but as you suggest, there are obvious near term headwinds.
https://www.marketscreener.com/quote/stock/NAPIER-PORT-HOLDINGS-LIMI-103506280/

A consensus of one?  That sounds like my wife...

Is she always right    Mine thinks she is but very often isn't lol

Even with possible NZX50 inclusion I am struggling with this one. 

[Basil]

P.S. I also think sometimes the liquidity exclusion process is a bit opaquer than some analysts think it is and therefore NPH is far from certain to be included in the NZX50 at this June review based on SAN's liquidity issue.

Further, if WHS makes an exit at the Sept or December review which is starting to look quite likely, currently position 53 based on a 6 month price average of $1.48, (spot price only $1.05), it could be by that time TWR's free float market cap based on 6 month price average, (currently just behind NPH but based on a 6 month price average of only 68 cents, v current spot price $0.83) will exceed NPH's.  It looks to me more likely TWR would get the nod next time rather than NPH

Conclusion.  If NPH doesn't get added to the NZX50 this month as a result of SAN's illiquidity, then people buying based on index exclusion might have to wait a very long time before index inclusion finally occurs. Plenty of risk with the NPH's FY24 forecast and possible index inclusion and Hectorplains has posted good info on log prices to think about too.  I really did try quite hard this morning to like this but...if you have to try that hard it's probably a good indicator to choose something else.

[Left Field]

Impressive result...... well done holders (and the NPH team)

https://www.nzx.com/announcements/462894

HIGHLIGHTS
 • Revenue rises 11.6% to $157.7 million, led by strong container services volume growth and yield improvements across all trade areas
 • Result from operating activities increases 23.5% to $64.2 million, benefiting from ongoing cost control, yield management and strong operating leverage
 • Underlying net profit after tax of $28.3 million, up 36.5% from $20.7 million in the prior year
 • Reported net profit after tax of $30.9 million, up 24.4% on the prior year's $24.8 million
 • Directors declare a fully imputed final dividend of 8 cents per share, taking total dividends for the 2025 financial year to 14.5 cents per share, up from 9 cents for the prior year, and representing a gross dividend yield of 5.9%
 • Earnings guidance for FY2026 for an underlying result from operating activities of between $70 million and $74 million