Daily ShareChat: Port of Tauranga

By Jenny Ruth

Thursday 4th November 2010

At its annual shareholders' meeting, Port of Tauranga again highlighted how well-positioned it is for being the major hub port in the North Island, says Jeremy Simpson, an analyst at Forsyth Barr.

"Not only can it already handle the largest ships visiting New Zealand, it can also, relatively cheaply, undertake the dredging required to accommodate the even larger ships expected over the medium term," Simpson says.

"It has significant infrastructure already in place, effective transport links and substantial land for development when required," he says.

The port reported a 10% rise in first quarter profit on the back of a 10% increase in trade volumes and a 25% increase in containers. That led Simpson to increase his forecast for net profit in the year ending June 2011 from $51.5 million to $53.5 million. He has also raised his valuation of the shares by 3% to $7.35.

"Port of Tauranga continues to be a resilient performer in the slow economic environment," Simpson says. The port is well-positioned for any export-led recovery. However, notwithstanding some improvements in imports and contained volumes this year, "the near-term outlook with regard to the speed of a recovery for the port sector remains uncertain."

Recommendation: Hold.

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