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Daily ShareChat: Port of Tauranga

By Jenny Ruth

Wednesday 24th March 2010

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 Jenny Ruth

Port of Tauranga's $15 million acquisition of Auckland-based Tapper Transport is small but Tapper's proximity to the port's Metroport and warehousing and distribution expertise improves its supply chain links and its ability to grow container movements at Ports of Auckland's expense, says Craigs Investment Partners analyst Geoff Zame.

The acquisition was at about five times Tapper's earnings before interest, tax, depreciation and amortisation (EBITDA) and accounts for about 1% of Port of Tauranga's enterprise value.

"The acquisition is part of Port of Tauranga's building-blocks approach to develop a more complete supply-chain solution for its inland port (Metroport) to be more competitive on price and service and to compete for import volumes that are currently going through Ports of Auckland," Zame says.

About 80% of importers and exporters use the Auckland industrial area where Metroport is located as their base.

"Port of Tauranga expects the proximity of Tapper's warehousing and distribution services to Metroport to provide a more cost-effective service for customers to use Metroport than using Ports of Auckland."

Zame says Tapper's will increase Port of Tauranga's earnings per share by 3.8% and he has raised his valuation by 2.8% to $6.93 a share from $6.74, although he hasn't taken into account any increase in import volumes as a result of the acquisition.


BROKER CALL:  Craigs Investment Partners rate Port of Tauranga as hold.



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