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Container Corporation (CCRI)
Infrastructure
Exim in better shape; domestic struggle on policy change. Concor revenues of
Rs9.7 bn were up 9.8% yoy. Margins were flat yoy but up 100 bps sequentially, led by
lower rail freight expenses. Exim revenue growth at 13.4% yoy was likely led by better
export import balance—this helped mitigate opportunities lost from destuffing at CFSs
and from empty repositioning. Domestic segment disappointed, possibly on account of
freight rate policy changes on bulk commodities.
Results broadly in line with estimates; revenue grows 9.8% on a yoy basis
Revenue records strong growth. Concor reported 3QFY11 revenues of Rs9.7 bn, up 9.8% on
yoy basis and marginally below our estimate (by 1%) of Rs9.8 bn. The increase in revenue is
likely led by better export import balance leading to stronger EXIM revenue (up 13.4% yoy).
Merchandise exports grew 30% yoy in 3QFY11 versus import growth of 5%.
EBITDA margin flay yoy - beat estimates. Concor reported flat margins of 28.9%, beating
our estimates by 100 bps. The margin expansion versus estimates was led by lower than
expected rail freight expenses as % age of sales (120 bps below estimates at 55.3%). Better
margins lead to a net PAT of Rs2.3bn in 3QFY11, 6% above our estimates of Rs2.15bn.
Nine-month performance. For the nine months ending December 31, 2010, Concor reported
marginally better revenues of Rs28.3 bn (up 2.9% yoy). EBIT DA margin expanded 40 bps to
27.9% in 9MFY11 from 27.5% a year ago, while net PAT grew 3.8% yoy to Rs6.3 bn.
Better EXIM balance may have buoyed EXIM segment; domestic lags on policy change
EXIM revenues at Rs7.6 bn were about 2.8% above our estimate and 13.4% up yoy while
domestic revenues of Rs2.1 bn were down 12.7% below our estimate and 1.5% down yoy. We
believe better exim balance must have reduced the problem of destuffing at CFSs which was
leading to loss of business for Concor. The domestic segment would have faced pressures of
freight rate policy changes on bulk commodities, thus disappointing on revenues as well as
margins. Domestic margins contracted to 11.4% in 3QFY11 versus 18.5% in 3QFY10 though they
did better than in the last quarter (9.9% in 2QFY11).
Reiterate REDUCE with a TP of Rs1250; will revisit estimates post today’s conference call
We retain our estimates of Rs68.1 and Rs78.2 for FY2011E and FY2012E, respectively (see
Exhibit4). We reiterate our REDUCE rating with a target price of Rs1250/share based on relatively
expensive valuations and increasing competition for market share.
We will revisit our estimates post today’s conference call.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Container Corporation (CCRI)
Infrastructure
Exim in better shape; domestic struggle on policy change. Concor revenues of
Rs9.7 bn were up 9.8% yoy. Margins were flat yoy but up 100 bps sequentially, led by
lower rail freight expenses. Exim revenue growth at 13.4% yoy was likely led by better
export import balance—this helped mitigate opportunities lost from destuffing at CFSs
and from empty repositioning. Domestic segment disappointed, possibly on account of
freight rate policy changes on bulk commodities.
Results broadly in line with estimates; revenue grows 9.8% on a yoy basis
Revenue records strong growth. Concor reported 3QFY11 revenues of Rs9.7 bn, up 9.8% on
yoy basis and marginally below our estimate (by 1%) of Rs9.8 bn. The increase in revenue is
likely led by better export import balance leading to stronger EXIM revenue (up 13.4% yoy).
Merchandise exports grew 30% yoy in 3QFY11 versus import growth of 5%.
EBITDA margin flay yoy - beat estimates. Concor reported flat margins of 28.9%, beating
our estimates by 100 bps. The margin expansion versus estimates was led by lower than
expected rail freight expenses as % age of sales (120 bps below estimates at 55.3%). Better
margins lead to a net PAT of Rs2.3bn in 3QFY11, 6% above our estimates of Rs2.15bn.
Nine-month performance. For the nine months ending December 31, 2010, Concor reported
marginally better revenues of Rs28.3 bn (up 2.9% yoy). EBIT DA margin expanded 40 bps to
27.9% in 9MFY11 from 27.5% a year ago, while net PAT grew 3.8% yoy to Rs6.3 bn.
Better EXIM balance may have buoyed EXIM segment; domestic lags on policy change
EXIM revenues at Rs7.6 bn were about 2.8% above our estimate and 13.4% up yoy while
domestic revenues of Rs2.1 bn were down 12.7% below our estimate and 1.5% down yoy. We
believe better exim balance must have reduced the problem of destuffing at CFSs which was
leading to loss of business for Concor. The domestic segment would have faced pressures of
freight rate policy changes on bulk commodities, thus disappointing on revenues as well as
margins. Domestic margins contracted to 11.4% in 3QFY11 versus 18.5% in 3QFY10 though they
did better than in the last quarter (9.9% in 2QFY11).
Reiterate REDUCE with a TP of Rs1250; will revisit estimates post today’s conference call
We retain our estimates of Rs68.1 and Rs78.2 for FY2011E and FY2012E, respectively (see
Exhibit4). We reiterate our REDUCE rating with a target price of Rs1250/share based on relatively
expensive valuations and increasing competition for market share.
We will revisit our estimates post today’s conference call.
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