PPAP's 1H17 review: earnings rise 2.5% YoY on solid revenue growth

Container throughputs reach record high

• Container throughputs in 1H17 reached 79,787 TEUs, the highest PPAP has ever handled during the first six-month period. This translates into a 20.8% surge compared to 1H16. As a result, container cargo volume rose 14.4% YoY to 665,761 tonnes. Meanwhile, general cargo volume continued to achieve a strong growth, climbing 42.1% YoY with 289,183 tonnes, and reflecting increased popularity in the use of general cargo shipments. The combined cargo volume in 1H17 then came to 1,320,122 tonnes, up 12.1% YoY despite oil & gas cargo volume falling 7.0% YoY. 

Top-line posts 10.0% YoY growth

• Thanks to increasing cargo traffic, total revenue in the first half of 2017 rose 10.0% YoY to KHR33.33bn. The solid top-line increase was thanks to a robust growth in main sources of revenue including income from stevedoring, lift-on lift-off (LOLO), and port services, which rose 12.4% YoY, 19.6% YoY, and 8.8% YoY, respectively. However, the overall revenue growth was undermined by a 38.2% YoY drop in income from storage services and an 88.6% decline in income from sand dredging services. The sharp drop in income from storage services was because one of its important customers ceased using storage services at PPAP, while the decline in income from sand dredging can be attributed to fiercer competition from private firms that were granted permission to operate the same services.   

Operating profit sees modest increase as depreciation expense soars

• EBITDA amounted to KHR16.45bn in 1H17, up only 9.1% YoY despite the 10.0% YoY revenue growth. This was because operating expense excluding depreciation increased 5.2% YoY, and was mainly driven by a 153.5% YoY jump in expense on fuel and gasoline with the recovery of global oil prices. Meanwhile, EBIT growth was even modest at only 3.4% YoY as a result of a 21.4% YoY surge in depreciation expense. The remarkable rise in depreciation expense was not surprising given the company’s post-IPO expansion.

Net profit rises 2.5% on solid revenue

• Net profit in first six months of the year came to KHR6.8bn, a 2.5% growth compared to the same period last year. The solid revenue growth was partly offset by the jump in expense on fuel and gasoline due to global oil price’s recovery and a significant rise in depreciation expense following the post-IPO expansion.

• Although 1Q17 saw a decline in net profit due to surging expenses, 2Q17 was marked by a double-digit growth in net profit thanks to the 15.0% YoY increase in revenue.