No Change to Our Port of Tauranga Outlook with Strong Container Growth to Offset Weakness in Logs

We maintain our earnings forecasts and fair value estimate of NZD 15.00 per share for Port of Tauranga. We expect underlying net profit after tax, or NPAT, will be flat in fiscal 2015 as the gain in containers will be offset by weakness in logs. We expect log volumes to decline by double digits in fiscal 2015 resulting from a material slowdown in China. Container trade through the port is expected to grow by 13.5% on the back of increased dairy shipments and higher imports. In the longer term, container volumes are forecast to rise by about 7% per annum. This will be driven by dairy shipments reflecting Port of Tauranga's 10-year agreement with Fonterra's logistics provider Kotahi and higher transhipments given the arrival of bigger container ships in the order of 7,000 twenty-foot equivalent units, or TEUs, versus 4,000 to 5,000 TEUs. The dredging program currently being undertaken and due to be completed in fiscal 2017 will make Port of Tauranga the only port in New Zealand capable of handling bigger ships.