Apr 2007 Financial News

Plipdeco Releases 2006 Year End Results

Apr 19, 2007

Results for the Year Ended December 31, 2006.

Point Lisas Development Company Limited (PLIPDECO) reported Earnings Per Share (EPS) of $3.72 for the year ended December 31, 2006. While this represents a significant increase of 220.69 per cent, it is important to note that the main contributor to EPS was Unrealised Fair Value Gains of $132.180 million or $3.34 per share. If these gains were removed from the EPS for both years, it becomes evident that the Company actually had a challenging year as the EPS would have fallen 34.48 per cent from 58 cents (2005) to 38 cents (2006). The Chairman in his statement related the difficult year to the Company’s transformation work at Port of Point Lisas.

Despite the disappointing bottom line (excluding Fair Value Gains), PLIPDECO experienced modest growth in its core business as Turnover rose 8.18 per cent to $208.981 million. This was due to an increase in Port tariffs, better revenue from its tug and towage company (PLIPWIJS) and a rise in container throughput at the Port of Point Lisas. A smaller increase in Direct Costs of 6.38 per cent or $64.438 million resulted in growth of 9.01 per cent in Gross Profit to $144.543 million.

As mentioned before, unrealized Fair Value Gains stood at $132.180 million which was actually 473.95 per cent higher than 2005’s Fair Value Gains of $23.030 million. The Company’s Operating Expenses rose 11.31 per cent to $107.436 thereby further eroding growth in its core business. Administrative Expenses in fact rose 5.68 per cent to $62.333 million. Other Operating Expenses however increased by a larger amount of 20.16 per cent to $45.103 million stemming from costs pertaining to port equipment repairs, higher maintenance and depreciation costs. Operating Profit including Fair Value Gains rose 186.37 per cent to $169.287 million. Without the Fair Value Gains, the Company’s Expenses would have reduced growth in Operating Profit to 2.84 per cent to stand at $37.107 million for 2006. Investment Income rose 26.03 per cent to $6.521 million while Finance Costs increased 13.70 per cent to $23.834 million.

Profit Before Taxation ultimately stood at $151.974 million up 250.77 per cent. However, if the Fair Value Gains are excluded, PLIPDECO’s Profit Before Tax would show a fall of 2.47 per cent to $19.794 million. The Effective Tax Rate was at 2.96 per cent for 2006 while the Company had a Tax Credit of $2.582 million for the previous year.

Ultimately, Profit After Tax rose 221.26 per cent to $147.482 million. However, excluding the Fair Value Gains PLIPDECO’s bottom line declined 33.11 per cent to $15.302 million.

Given these results and the fact that the Company continues to focus on infrastructure and equipment upgrades, we are forecasting core Earnings Per Share of 38 cents for FY 2007. At the current price of $8.25, PLIPDECO is trading at a price/earnings ratio of 21.71 times. This share usually trades as low as 9 times earnings and as such, we continue to recommend a SELL.

The Board has recommended a final dividend of 5 cents per share. Once approved, this would bring the total dividends paid for FY 2006 to 15 cents compared to 21 cents for 2005.

Sreshtha Tewari
WISE Research Team
Thursday, April 19, 2007