PPAP's 4Q16 Review: Net profit surges 74.8% YoY in 4Q16; 28.4% YoY in 2016

Container throughput in 4Q16 up 5.0% YoY;

• Container throughput handled by PPAP in 4Q16 came to 36,884 TEUs, up 5.0% compared to the same period in 2015. While container throughput for imports rose slightly by 1.8% YoY, container throughput for exports saw a solid increase of 8.6% YoY, thanks particularly to a jump in exports of rice (PPAP handled 56,118 tonnes of rice for exports in 4Q16, vs 15,890 tonnes in 3Q16). Total container cargo volume rose 14.1% YoY to 352,208 tonnes between Oct and Dec last year. On the other hand, 4Q16 saw a 0.5% YoY drop in general cargo traffic in contrast to the previous quarters which were marked by strong growth in general cargo. The combined cargo volume (including gas & oil cargo) handled at PPAP during the three-month period stood at 596,891 tonnes, a 16.0% increase YoY. In 2016, container throughput totaled to 151,781 TEUs, increasing modestly by 4.8% from a year ago.  

Top-line growth slows to 5.5% YoY as income from sand dredging declines

• With modest growth in cargo traffic, top-line growth moderated to 5.5% YoY in 4Q16 from a solid 9.1% YoY in the previous quarter. A breakdown of total revenue indicates that the main sources of revenue including income from stevedoring, lift-on lift-off (LOLO), and port services continued their growth, rising 12.6% YoY, 10.1% YoY, and 10.6% YoY, respectively. However, the overall revenue growth during 4Q16 was undermined by a 47.9% YoY fall in income from storage services and an 85.2% decline in income from sand dredging service.
• In 2016, total revenue reached KHR66.1bn, up by 7.5%, vs 14.5% in 2015 and 16.9% in 2014. The slowdown in revenue growth was mainly driven by a huge drop in income from sand dredging and a slow growth in income from LOLO services. Income from stevedoring rose 11.1% YoY, port services 15.0%, and storage 63.9%. Income from LOLO grew well below 10% at 8.4% YoY, most likely due to the implementation of the 5% reduction on LOLO service fees from mid-June, following the government’s instruction to lower the fees to help reduce the Kingdom’s transportation and logistics costs. On the other hand, income from sand dredging fell 55.7%, due to increased competition, with the Ministry of Mine and Energy granting “sand dredging” licenses to other private firms.  

Operating profit surges 17.9% YoY in 4Q16

• In 4Q16, EBITDA increased 12.6% YoY to KHR7.3bn, and EBIT rose 17.9% YoY to KHR5.19bn. The double-digit growth of EBITDA and EBIT was achieved despite modest revenue growth, because general administrative expense remained almost unchanged (-0.1% YoY) while other income jumped 211.7% YoY, significantly offsetting the 16.6% YoY rise in cost of services.
• In 2016, EBITDA and EBIT rose 7.1% and 8.9%, respectively. While cost of services during the year rose 4.1% reflecting modest growth of container throughput and revenue, general administrative rose 22.4%, mainly driven by strong growth in salaries and wages as a result of post-listing organizational restructuring.

Net profit jumps 74.8% YoY in 4Q16 and 28.2% YoY in 2016

• In 4Q16, pre-tax profit soared 21.2% YoY, while net profit jumped 74.8% YoY as income tax expense dropped by 57.6% YoY.
• In 2016, net profit came to KHR16.57bn, up 28.2% compared to the previous year. Significant growth in net profit last year was mainly due to the 3-year long tax incentive that will be enjoyed by PPAP as a listed company from 2016 to 2018.