HPH Trust

HPH Trust: Citi says the labor disruptions at HPHT's Hong Kong port are spurring concerns over the impact on labor flexibility and likely wage-rate pressure. Highlights wage rates could be pressured upward by 10% this year on an annual basis, above the 5% estimated. Says , the notable flexibility that HIT enjoys regarding its current subcontractor labor structure (pertaining to roughly two-thirds of its operational staff) could also be in jeopardy, particularly in the current volume environment and what it believes to be structural longer-term headwinds for export growth out of South China/HK. The house cuts TP to US$0.71 from US$0.74 to reflect the selloff in Cosco Pacific (1199.HK) and China Merchants (0144.HK), resulting in lower peer P/E multiples of 14.4X and 9X respectively, compared with HPHT's 23.8X. Keeps a Sell call. While Citi appreciates the relatively higher dividend/distribution yield, it notes uninspiring fundamentals (and now a labor disruption) will weigh on the name. The stock is down 3.6% at US$0.81.