Following a weak first half, growth gathered momentum in the second half of the year to June, with a 17.7% increase in revenue from record fertiliser and dairy stock import volumes.
Overall volumes rose 4.4% to 2.24 million tonnes across the southern wharves.
ABN Amro Craigs broker Peter McIntyre said aside from potential long-term opportunities, such as oil exploration in the Great South Basin and similarly lignite exploration, the dairy sector acted as a "near-term catalyst" for South Port which should provide ongoing share price support.
"Southland is firing on all economic cylinders, especially the boom in dairying with about 130-plus farm conversions on the go," Mr McIntyre said.
Subsequently, ABN has lifted its recommendation on South Port shares from sell to hold and upgraded its 12-month target price 33% from $1.66 to $2.21, with shares at present trading around $2.16.
South Port, which is 66% owned by the Southland Regional Council, was carrying no debt and while having increased its dividend from 7.75c per share last year to 9.5c, it could potentially and "comfortably accommodate" a special dividend up to 20c, Mr McIntyre said Its debt-free status also left it well positioned to consider any capital expenditure, he said.
Also contributing to the result was a renegotiation with the Tiwai Point aluminium smelter for lease of its wharf, while in the near future the two new dairy plants, Dairy Trust's plant at Awarua and the Mataura Valley Milk venture, were expected to be fully operational by next year.
ABN forecast an increase in tonnage next year of almost 1.5%, from 2.24 million tonnes to 2.28 million tonnes.
Port Otago will release its full-year results to its 100% shareholder, the Otago Regional Council, next month.
Mr McIntyre's financial disclosure document is available on request.
