Success a burden for Port of Tauranga
Port of Tauranga [NZX: POT] handled fewer containers in the second half of its financial year compared to the previous year when industrial action plagued rival Ports of Auckland.
Analysts are also finding it hard to justify the premium the stock trades at even though it is regarded as a well-managed business with growth prospects.
Port of Tauranga's shares were unchanged at $14.35 in afternoon trading, after falling 2.4 percent on Thursday when the port reported another record result.
Net profit of $112.1 million in the year ended June 30 was up 52 percent but First NZ Capital said the underlying profit was weaker than expected in the second half due to a lower contribution from the core port services business.
That's caused the firm to lower its earnings forecasts for the port by $2 million in the 2014 and 2015 years.
Port of Tauranga remains a very well managed business and is strategically well positioned to capitalise on an industry shift towards the use of larger container vessels and trans-shipment of cargo through hubs, First NZ Capital said.
It cited a flow of freight back to Auckland and uncertainty about consolidation of ship calls at ports as risks.
"Because of Port of Tauranga's long track-record of strong double-digit compounded earnings growth the stock has consistently traded at a premium to our underlying discounted cashflow valuation.
"We struggle to justify a rating other than underperform," the brokerage said.
Port of Tauranga handled the equivalent of 135, 771 standard-sized containers in second quarter of calendar 2013, down from 146,753 in the same period a year ago, and it handled 129,596 in the first quarter, down from 139,653 the previous year, according to figures provided to the Ministry of Transport by ports.
Ports of Auckland staged a recovery from 86,299 in the first quarter of 2012 to 124,054 in 2013 and its second quarter levels also rose.