Extra volume boosts target price

First NZ Capital has increased its 12-month target price for Port of Tauranga shares by 20 cents to $16.50 based on a rise in volume from Maersk’s announcement its Southern Star service will return to the Bay of Plenty. The deal comes 12 months after it shifted to Auckland. The broker notes Tauranga expects to benefit by an extra 70,000 20-foot equivalent unit (TEU) containers a year when the service starts in August 6. The increase is partly offset by log export volumes dropping further for the 2015 financial year. First NZ Capital notes feedback suggests the June 26 alliance between Maersk and logistic company Kotahi may result in cargo being consolidated on fewer services as other lines look to amalgamate or exit New Zealand. “There is little surprise international lines are upset by the alliance,” states the broker. “A trade route that was already struggling to earn returns will become more challenging for other lines. “The short-term risk is the negative reaction sees a shift in services away from Tauranga. However, its proximity to New Zealand’s largest export production region should help to mitigate this risk.”