Hutchison Port Holdings Trust

Ladies and gentlemen, welcome to the conference call of Hutchinson's Port Holdings Trust interim results announcement for the period ended 30th of June, 2026. Now, I will hand over to Ivor Chow, the CEO of Hutchinson's Port Holdings Trust. Mr. Chow, please begin.

Thank you. Good afternoon, everybody. Thank you for joining our half-year results call. And as usual, I will first give a review of, you know, how I saw the first half, how we did, as well as, you know, give some of my thoughts as to, you know, what is the likely outcome for the second half as well. And then I'll pass on to our CFO, Ivy Tong, to go through the news review, and then we'll end it with the Q&A. Overall, first half, I think for the trust-wise, I think we did pretty well, considering all things, given how volatile the world has been, as well as the Ukraine conflict, the Israeli conflict, as well as the Iranian conflict. We have actually done quite well year on year, as well as kind of meeting our own internal budget as well. Overall, our volume was up against last year, overall about 5%. Obviously, the outperformer has been for over the last couple of years, Yan Tian, and Yan Tian continues to do quite well in the first half. Hong Kong is still collectively on the first year below last year, 5%. But if you kind of look at how we did first quarter, we were actually down closer to 10%. And so we actually had a positive quarter for Hong Kong. and the first time that we have seen actually growth for Hong Kong over the last three, four years. So Hong Kong seems to start to show sign of stabilizing. So overall, if you look at from a volume standpoint, from a margin standpoint, and from a profitability standpoint, and because we have been able to manage our interest costs fairly well, So we did have, you know, decent amount of profit growth. And so, you know, we are, we will be distributing half year interim dividend of five Hong Kong dollar cents per unit, which is the same as what we did during last year in 2025 as well. And if you kind of look through some of the volume growth in the first half, you would see that, you know, for Yantian in particular, U.S. and Europe trade continues to do quite well, in particular the U.S. trade in the second quarter, because U.S. trade was actually down first quarter due to the tariff impact. But I think after President Trump and President Xi, Chairman Xi met in Beijing, you know, the market felt that there was kind of resemblance to normalization between the U.S.-Sino relationship, and therefore, you know, a lot of shippers were rushing to export their U.S. cargo in particularly April and May and a little bit of June as well. So you would have seen that the U.S. freight rates have actually increased quite a bit during that period of time. So I would look at that as more for front loading and obviously because last year, if some of you remember, the tariff war actually started in the second quarter. So we actually had an unusually low base last year and hence the Strong quarter that we have seen in the U.S. is just due to a lower base last year as well. And we are monitoring the situation, whether it would continue into the third quarter. I think third quarter, we're still looking okay for the time being. But a lot would depend on, you know, the further meetings that is planned between, you know, Chairman Xi and President Trump in the U.S. visit as well, the APEC visit as well in Shenzhen. So there's certainly a little bit of front loading involved and whether that will continue into the fourth quarter will actually depend a lot of the consumption demand. Obviously, with fuel prices being quite high, inflation is obviously quite high in the US as well as other places. And that may impact consumer sentiment coming into the second half as well. And obviously, you know, with the Fed, and now looking potentially to increase rates rather than decrease rates as originally anticipated. Interest rate will play a factor, not only in the consumption, but also in the fact that we would have about $500 million of refinancing to be done, likely to be a bond depending on market conditions. But we are looking at quite a step up in interest costs from the refinancing. and so we do expect pressure on interest costs in the second half as well. But we are continuing our plan to pay down debt, continue paying down the one billion that we have committed to every year and we will do so this year as well. Hopefully that will offset some of the interest cost increase due to underlying rate increase as well. So overall, while the Iranian war has affected fuel prices which obviously impacted our costs as well but the volume has grown and we are less affected by the Middle East trade comparatively so with Hong Kong transshipment picking up a little bit with Yantian export picking up a bit we're still doing relatively well looking into the second half as I said a lot of uncertainty would relate to some of the conflicts we've seen. Even the Red Sea is now looking to flare up again, and that may have some impact. But due to the regional conflicts around the world, we are seeing a lot of congestions around ports around the world, in Singapore, in Shanghai, Ningbo, due to weather. So there is actually, and with ships coming online from the shipping lines as well. A lot of new ships coming on. There is a need for a buffer port, if you will, to manage some of the port congestion we have seen around the world. So Hong Kong being a bit underutilized potentially can pick up some of that transshipment volume as well, which we are working very hard on. You know, Hong Kong is embarking on its five-year plan as part of the 15 five-year plan of China. And, you know, we're lobbying very hard with the government to see what policies can be provided to support the Port of Hong Kong as well. So we are working in all fronts to try to, you know, get Hong Kong back into shape. But with the uncertainty over, you know, consumer demand and the overall supply chain situation, we are cautious in terms of the second half envelope. So with that, I pass it on to Ivy to give us a bit of a run through the numbers, and then we'll go into the Q&A.

If I jump onto slide nine, looking at our throughput volume, for the trust at the first half of 2026, we had throughput of around 11.7 million, a 5% year-on-year increase. In terms of YICT and HICT, there's a 10% growth, so throughput ended up at around 8.5 million, and for HPHT Kuai-Ting, we had a 5% year-on-year drop, so that throughput was around 3.3 million. If we look at the revenue and other income, on the left-hand side of the bar chart, you see that we had a 10% year-on-year growth, so that total revenue and other income reached around HK$6.2 billion. Mainly, this is due to higher throughput as well as higher storage income, and also for this half, we also benefited from the RMB appreciation. And if you then look onto the right-hand side in terms of the segment information, what you'll see that is in the first half of 2026, 83% of our revenue came from operations in Chinese mainland with the remaining 17% from Hong Kong. The increase in proportion for Chinese mainland when compared to the first half of 2025 is largely due to the RMB appreciation impact. If we then jump to the total capex, you will notice that for the first half of June 2026, total capex was around 277 million, 28% increase year-on-year. This is largely due to the increase in capex for Yantan as they progress with its QC heightening program and also with the purchase of new QC to just accommodate the increase in deployment of larger container vessels. and then reading on then is to take a look at our total debt and net debt position. What you see that in the first half is that there's a drop in short-term debt which is offset by an increase in our long-term debt and this is mainly just due to the refinancing for the redemption of the March US 500 million bond with a new five-year bank loan facility that was done at March. So that total consolidated debt at the end of June was around $24.2 billion. And included reflected in here is that from our announced plan of our $1 billion repayment, we've already undertaken $200 million repayment in the first half of this year, with the remaining $800 million expected to take place in the second half of this year. In terms of net attributable debt, it is around $17.2 billion, which is a 4% reduction when compared to the year-end position at the end of December 2025. As I just mentioned, we're currently assessing the refinancing option for the US $500 million guarantee notes that is due to expire in September, with most likely market conditions meeting with a new bond issuance. Finally, I just want to go through quickly the half-year results, which is on slide 15. As mentioned before, total revenue was 10% better year-on-year at $6.2 billion. Our total operating expenses recorded a drop of 3% to around $3.4 billion, and included in there is a disposal gain that we have realized in the first half of 2026 of $164 million, which is in relation to the land expropriation at Yanteng. Upgrading profits is around 2.8 billion, 30% better. As we mentioned, we had a 10% saving in interest costs, so that interest expenses was around 382 million, largely because average highball for the first half is lower than the same period last year, and also we benefited from last year's 1 billion lower payments. profit after tax was 1.5 billion, 47% better, with profit after tax attributable to unit holders at 491 million, 85% better year on year. So that's the update for the financial positions and results of HPH Trust.