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Global Ports to reduce Turkish exposure

Increased geopolitical tensions in Turkey have constrained full-year profits
March 12, 2018

Shares in Global Ports (GPH) were marked up even though the group’s maiden set of full-year results as a public entity detailed flat sales growth, a contraction in the cash profits margin, and operating profit that halved on the previous year. In fairness, it can take time for the dust to settle when companies transition to a main board listing. So we shouldn't be surprised that profitability was constrained as a result of costs associated with the IPO, along with amortisation charges relating to port operating rights – but they weren't the main issues.

IC TIP: Hold at 430p

Increased geopolitical tensions in Turkey – an attempted coup, terrorist attacks and the migrant crisis – hit the cruise business, where sales fell 6.3 per cent to $50.3m (£36.2m). Sales linked to the country halved from a year earlier, although management is optimistic that this should stabilise in 2018 after several cruise lines indicated that they might restore normal routes in the eastern Mediterranean. Strip out the shortfall from “higher yielding” Turkish ports, and cruise revenues were up by around 10 per cent, while a 7.9 per cent increase in commercial sales bolstered the group top line in the face of the regional problems.

Bloomberg consensus estimates give adjusted EPS of 45.6ȼ for the Dec 2018 year-end, rising to 61.6ȼ in 2019.

GLOBAL PORTS HOLDING (GPH)  
ORD PRICE:430pMARKET VALUE:£270m
TOUCH:420-430p12-MONTH HIGH:762pLOW: 390p
DIVIDEND YIELD:9.7%PE RATIO:na
NET ASSET VALUE:273ȼ*NET DEBT:86%
Year to 31 DecTurnover ($m)Pre-tax profit ($m)Earnings per share (ȼ)Dividend per share (p)
2014**90.725.5nana
2015**10513.9nana
2016**1155.34.3na
2017116-10.5-26.041.7
% change+1---
Ex-div:tba   
Payment:tba   
*Includes intangible assets of $447m, or 712ȼ a share **Pre-IPO figures. £1=$1.39