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Port of Tauranga

Port of Tauranga outlook favourable but shares have baked in too much growth, rated ‘sell’

Sign in front of Mount Maunganui wharves, Port of Tauranga. Photo by Lynn Grieveson

Port of Tauranga is a high-quality company lauded as the most productive and efficient port in Australasia but its shares are too expensive, according to Morningstar which recommends investors sell the stock.

The port company’s shares recently traded at $5.13, a significant premium to Morningstar’s $3.80 fair value estimate. The research house has a one-star rating on the stock, which indicates the market is pricing in an excessively optimistic outlook and encourages investors to strongly consider exiting the stock. Other analysts agree, with four having a ‘sell’ rating on the stock and one a ‘strong sell’, with a median price target of $3.80, according to Reuters data.

“Port of Tauranga is a high-quality company,” Morningstar analyst Adrian Atkins said in a June 12 research note. “While the firm is in a favourable position with a virtuous outlook, the prevailing share price has baked in too much growth.”

The port is the country’s largest for cargo volume and second largest for container throughput, and Morningstar notes it runs at a cost advantage to other ports in the country due to its lower-cost non-union workforce and large-scale operations. It’s set to benefit in the future as larger international ships call at fewer ports, expected to prompt a rationalisation in New Zealand to two hub ports servicing the North Island and the South Island and increased use of rail and coastal shipping.

“The competitive advantages in New Zealand’s largest port are undoubtedly compelling,” Atkins said. “As port operations rationalise, and as the only port in New Zealand capable of accommodating larger cargo ships, we expect Port of Tauranga will continue to win share from competitors. Fortunately, it has ample land to accommodate expansion.”

Still, despite the rosy outlook for the company, Morningstar notes Port of Tauranga is trading on a “mediocre” fiscal 2018 dividend yield of 3.5 percent including special dividends, and the research house forecasts a fiscal 2019 dividend yield of 3.7 percent, falling to 3 percent in fiscal 2020 as special dividends finish.

With the shares trading on a forward price to earnings ratio of more than 37 times “significant growth is already priced in” and “overly optimistic”, Atkins said in his note titled ‘Port of Tauranga is a High-Quality Company …But Wait for a Better Price’.

Port on Labour’s $20m rail plan: ‘I’m surprised no one talked to us about it’

Labour leader Jacinda Ardern’s $20 million promise to link passenger rail services between Tauranga and Auckland has already hit a snag, with Port of Tauranga’s boss questioning its likelihood.

The high-speed rail proposal was released last week by lobby group Greater Auckland and was immediately backed by the Green Party.

Ardern yesterday addressed a crowd of about 400 on Tauranga’s waterfront and pledged Labour’s support for the plan.

She said Tauranga was a special place for her and called up a young girl who was a family friend with a home-made “Let’s do this” T-shirt.

“The ‘Golden Triangle’ of Auckland, Hamilton, and Tauranga contains half our population and economy. In the next 25 years, it is projected to gain another 800,000 people – three-quarters of national population growth. It’s time this growing region had a modern, rapid rail service,” Ardern said.

Ardern pledged the $20m to establish the first stage of the passenger service proposal – estimated to cost $10m.

If demand is there, Labour would look to invest in stages two and three of the plan, delivering services travelling up to 160km/h throughout the wider region.

The additional $10m would be invested over five years for operating costs.

When asked by the Bay of Plenty Times if she had spoken with the Port about whether the plan was possible, she said: “Not specifically, but I don’t imagine it would have any impact on the work that they do.”

Port of Tauranga chief executive Mark Cairns disagreed.

There are 78 freight trains a week on the rail line to the Port and this was expected to rise to more than 90 per week over the next 12 months.

“I’m surprised nobody has talked to us about it,” Cairns said.

Labour’s Transport Spokesman Michael Wood said the eastern main trunk line –
“which will be the bit of track that the Port is referring to” – had capacity for four trains per hour.

Wood said Labour was looking at just two trains a day using the line, “so it’s got capacity of four per hour, there is absolutely capacity within there to deliver that”.

“And no one user … certainly, has a right to exclude others,” Wood said.

“As the policy gets developed further and implemented, we’d certainly sit down and talk with the Port, but when you’re developing a policy like this, you don’t necessarily sit down with what is effectively a private company that currently has exclusive use of that track and has interests of potentially keeping others out.”

Tauranga Mayor Greg Brownless said he did not think the rapid rail proposal would have an impact on the Port.

“We’re only talking about a train or two a day, so I don’t think that would interfere with the Port, no.”

Kiwirail were not able to respond to requests for current line use by freight trains in and out of the port before publication last night.

Transport Minister Simon Bridges, who is also Tauranga’s MP, said Labour’s adoption of the passenger service was unrealistic.

“The Auckland-Hamilton-Tauranga rail line is our busiest freight route and simply doesn’t have the capacity to also be a commuter rail line.”

Tauranga Labour candidate Jan Tinetti said passenger rail was long overdue for Tauranga.

“The growth that we’ve had here has been phenomenal in the last few years and we need to actually look at public transport.”

Labour also plans to:

• Boost transport investment in regional projects across the country by doubling the funding range in the Government Policy Statement.
• This will lift funding available for regional projects from $70m-$140m a year to $140-$280m a year.
• The increased funding will be available for all regions and for all transport modes.
• Ardern also set out a promise for her first 100 Days in Government – holding a roading summit in Wellington for the county’s local bodies and transport bodies.

Record one million containers through Port of Tauranga in one year

The Port of Tauranga has set a new record after processing one million shipping containers in one year.

Chief executive Mark Cairns said the was a momentous occasion was reached on Tuesday last week.

“We are the first port in New Zealand to reach the milestone”.

”We have gone from a small, insignificant regional port to the largest port in New Zealand by a good margin.”

According to Statistics NZ, the Port of Tauranga was the largest port by volume in the country.

The Port of Tauranga had spent $350 million on a 10-year capital investment programme to enable it to become ”big ship” capable. The upgrade was beginning to pay dividends, Mr Cairns said.

”It has been a good year and a relief to get the dredging programme done as 6 million cubic metres of material was excavated off the sea floor. There is a lot of risks involved with earthmoving and even more when it’s under water.”

Ships that can hold 9,500 containers are coming into the Port weekly to load New Zealand export cargoes which are shipped directly to North Asia.

”They are double the size that was previously calling into New Zealand, and we are getting those ships sooner than we expected.”

”These shipping lines are only calling into Tauranga, and they aren’t calling into any other New Zealand or Australian Port with these large vessels.”

About 41 per cent of New Zealand’s total exports by value flowed through the Port of Tauranga, Mr Cairns said. The primary products included dairy, meat, forestry, paper, linea boards, pulp, kiwifruit,

At any one time, there would be more than 2000 people working at the port, which had increased along with the trade through the Port, Mr Cairns said.

In August the Port would also announce its financial results and estimates indicated the 2015/16, $79m profit would be surpassed.

”Our best estimate to the market is $79m to $83m, so we are confident we will have an increase in profitability that is matched in trade by hitting the million-containers cargo mark.”

Mr Cairns said he was looking forward to celebrating with customers and major stakeholders at a function on Tuesday.

Priority One chief executive Nigel Tutt said the port was ”an extremely important asset for the city’s economy”.

”Its strength is an important driver of business growth and a key competitive advantage in the attraction of new business to the city – we see that on a weekly basis.”

The success it had following its bold expansion programme shows investment for the future could pay dividends for the port and the wider region, he said.

”It also places us in an excellent position for the future.”

Businesses would also benefit by the bigger ships.

”Ships of that size offer local businesses excellent efficiency and time to market for their existing customers and access to new markets that they simply wouldn’t have otherwise.”

Tauranga City Council Mayor Greg Brownless said the port was well run and competitive.

Its impact on the region’s employment, directly and indirectly, was enormous and great for the community, he said.

Protesters blockading Tauranga Harbour

NZHerald 15 Jun, 2017 9:59am

A flotilla of boats is blocking the shipping lane of Tauranga Harbour.

In a statement, Ngai Te Rangi iwi said the protesters signalled to the port authorities they would not give way to any commercial vessel attempting to cross their lines.

The flotilla controller also signalled that recreational boats will not be impeded.

The protest was not aimed at the Port of Tauranga, the statement said, but aimed to assure the Prime Minister and Minister of Treaty Negotiations that Ngai Te Rangi would not accept any Crown deal giving rights to Tauranga Moana to a Hauraki collective of iwi and hapu.

In the statement, Ngai Te Rangi claimed Treaty Negotiations Minister Chris Finlayson was pushing through a secret deal that would give those rights to the Hauraki iwi collective.

Further action was planned for Saturday June 17.

Ngai Te Rangi planned long term protests and is setting up a base camp on Matakana Island.

A reporter at Pilot Bay said a waka in the harbour had failed to stop a ship entering the port.

A spokesperson for Minister for Treaty of Waitangi Negotiations Chris Finlayson told the Bay of Plenty Times there had been no secret deal.

“It is simply wrong. No secret deal has been made.”

The spokesperson said proposed arrangements for the Tauranga Moana Governance Group, part of the Tauranga Moana Framework, provided for four seats for Tauranga Moana iwi (this includes Ngai Te Rangi), one seat for iwi of Hauraki (and any other iwi with recognised interests in the Tauranga Moana catchment) and five seats for local government.

The Waitangi Tribunal confirmed in 2004 that iwi of Hauraki had customary interests in Tauranga Moana, particularly in the Te Puna and Katikati area, the spokesperson said.

“The Minister also understands there are rumours of a deed signing for Pare Hauraki. No date has been set for any such signing. Officials informed Tauranga iwi of that fact last week.”

The Hauraki Collective Redress Deed, which was initialled in December, is available to view online at https://www.govt.nz/treaty-settlement-documents/hauraki/.


Two rail sidings at KiwiRail’s Southdown freight hub have been transformed to accommodate “giant” forklifts able to carry 80 tonnes of containers in order to improve the transfer of freight around the North Island generated by the new “mega ships” calling at the Port of Tauranga.

KiwiRail chief executive Peter Reidy says the upgrade illustrates his business’ commitment to support its customers’ growing demand in the aim of working collaboratively to “boost New Zealand’s exports and grow the economy”.

“The increasing traffic from North Island ports and the arrival of mega ships carrying thousands of containers means KiwiRail needs to ensure we have the capacity to support this increased demand,” he says.

“As well as enabling our customers, the upgrade will lead to improved safety, increased reliability and greater efficiency of our rail services.

“We now have two, top-class tracks with a 50-year life.”

Involving 1200 cubic metres of concrete and 10,000 cubic metres of asphalt, the sidings were transformed in a ten-day, 24-hour operation entailing over 9000 worker hours.

“Our people did an exceptional job and completed the project on time and within budget. We are very proud to be playing our role in helping to grow New Zealand.”