South Port's earnings before interest, tax, depreciation and amortisation were up 13% at $6.6 million for the year to June and its after-tax profit, excluding one-off gains of more than $800,000, was up 35% at $3.2 million.
Craigs investment broker Peter McIntyre said South Port's target price had been upgraded 23%, from $2.21 to $2.72, largely for having agreed 35-year terms on leasing of the Tiwai wharf, although the pricing has not been agreed and still is under under arbitration.
Once the terms of agreement and pricing on the wharf were agreed, uncertainty would be removed and there could be a "modest" lift in margins in 2011 and a subsequent boost to the share price, Mr McIntyre said.
South Port's overall annual volume of 1.86 million tonnes of cargo across its wharves was down 17% on the record tonnage of 2008, most significantly by a 30% reduction of 260,000 tonnes from the Tiwai smelter, its biggest customer with about 50% of volume.
Normally, Tiwai alone would provide about 1.1 million tonnes of cargo a year.
Of that, two-thirds would be inbound as raw materials and the other third outbound in finished product.
Mr McIntyre said South Port's after-tax profit guidance for 2010 was $3 million.
However, if Tiwai export volumes returned to 2008 levels that could be a "conservative" estimate.
Craigs has a revised after-tax profit forecast, up 15.5% at $3.4 million for 2010.
South Port had continued to benefit from the dairy sector, although fertiliser and fuel imports were down as the lower Fonterra dairy payout put pressure on dairy farmers, Mr McIntyre said.
