HPH Trust continued to be negatively impacted by the mounting global trade uncertainties caused by the current trade tensions, resulting in the company recognizing a significant impairment loss in the last quarter of 2018. Overall, the company’s China port operations maintained their outperformance over the port operations in Hong Kong.

Performance Drivers (Positive Factors)

• Yantian International Container Terminals

Yantian International Container Terminals (YICT) continued to outperform HPH Trust’s Hong Kong port operations. Although the company’s overall FY 2018 throughput was 1% lower year-on-year, YICT’s throughput increased by 4%. This rise in throughput was primarily due to growth in the US and transhipment cargoes.

• Outbound Cargoes to the US

Outbound cargoes to the US increased by 5% in FY 2018, with growth in the last quarter rising up to 10%. This positive development was driven by the frontloading of cargoes – in anticipation of the 25% tariff to be implemented by the US to Chinese exports (originally scheduled in January 2019).

• Average Revenue per TEU for Hong Kong

HTH Trust recorded a higher average revenue per TEU for Hong Kong in FY 2018 than last year, mainly due to a write-back of agency fee provision following the finalization of tariff negotiation.

Performance Drivers (Negative Factors)

• Hongkong International Terminals, COSCO-HIT Terminals and Asia Container Terminals

The combined FY 2018 throughput of Hongkong International Terminals, COSCO-HIT Terminals and Asia Container Terminals was 7% lower than the previous year. This decline in throughput came on the back of a reduction in transshipment cargoes.

• Outbound Cargoes to the European Union

HTH Trust experienced weak demand for outbound cargoes to the European Union in FY 2018, resulting in a 1% decrease from FY 2017.

• Average Revenue per TEU for China

HTH Trust recorded a lower average revenue per TEU for China in FY 2018 than the previous year, mainly as a result of an increase to transshipment mix.

• Impairment Losses

HPH Trust carried out an asset impairment assessment in FY 2018 and recognized non-cash impairment losses of HKD 12,289 million during the fourth quarter. This was in view of the mounting global trade uncertainties caused by the current trade tensions – which caused multinational corporations to make adjustments to their strategies, such as accelerating the diversification of production bases outside of China and addressing the effects stemming from the structural changes within the shipping line industry.