Xiamen government to takeover parcels of land. Xiamen Int’l Port (03378 HK) released announcement that Xiamen Land Development Centre, on behalf of the Xiamen Government, shall take over the parcels of land on which the Dongdu Terminal is located, together with its related assets by way of land resumption. The takeover is at the preliminary stage and the scope of related assets, compensation and transaction time frame are uncertain at this stage. The land takeover is pursuant to the development plans of the Xiamen Government under the Xiamen International Cruise Home Port Project.
Land takeover may have significant impact on normal operation of the terminal. We think it may be difficult for the Company to achieve a land replacement agreement with Xiamen government, under which the Company could obtain another land by the coast to resume the original terminal operation in Dongdu Terminal.
Revise down FY12-FY14 earnings estimates. To reflect our concerns about the prospect of the future operation in domestic trade, we revise down our FY12-FY14 earnings estimates to RMB220 million, RMB196 million and RMB107 million, respectively.
Maintain ‘Neutral’, but revise down TP to HK$0.75. As we do not expect a land replacement to occur at this stage, given the fall back of earnings during FY12-FY14, we revise down TP to HK0.75, representing 7.4x, 8.3x and 15.2x FY12-FY14 PER and 0.4x FY12 P/B ratio