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Volume growth to drive valuations
Allcargo Global Logistics’ (Allcargo) Q4 results were
mixed compared to estimates. While volume growth
helped boost revenues, cost pressure and margin
contraction led to lower profitability. Container volumes
remained buoyant (up 17.7% YoY and 3.2% QoQ) at
123,443 TEUs. The CFS (container freight station)
segment recorded the highest-ever volume in Q4 at
63,729 containers on the back of robust port volumes
and timely capacity expansion.
Q4 results mixed: Q4 consolidated revenue grew
25.9% YoY to Rs7,037mn, 8.9% higher than estimated.
However, EBITDA margins contracted 16bp QoQ to
10.9%, 289bp lower than 13.8% estimated on the back
of higher operating costs. Net profit at Rs419mn was
9.6% below our estimates, while net margin at 6.0% was
122bp lower than expected.
CY10 results in-line: CY10 consolidated revenue was
2.2% higher than estimated at Rs26,329mn. EBITDA at
Rs2,790mn and PAT at Rs1,706mn were 4.2% and 2.5%
lower than expected.
Maintain Buy; marginally revise estimates: We have
revised our estimates for CY11 and CY12 to reflect
better revenue growth, but lowered operating margin
by 91bp to 11.3% and by 84bp to 12.1% respectively.
EPS is now lower by 3.0% for CY11 to Rs15.3 but 0.8%
higher for CY12 at Rs18.1. We maintain Buy with a target
of Rs217 (earlier: Rs220), rolling forward our valuation to
12x CY12E earnings.
Maintain Buy with target price of Rs217
We maintain Buy rating with a revised price target of Rs217 (earlier: Rs220), rolling forward our
valuation to 12x CY12E earnings. We remain upbeat on the outlook of Allcargo due to growth in
container volumes both in the CFS and MTO operations (ECU Line + domestic MTO) and
improvement in ECU Line margins. At the CMP, the stock trades at 9.3x and 7.8x CY11E and CY12E
earnings, respectively. On EV/EBITDA, the stock trades at 5.5x and 4.0x, respectively. Our target price
of Rs217 discounts 6.4x CY12E EBITDA and 1.7x P/BV.
The company is benefiting from the growth in the ECU Line business and also from the operating
leverage the subsidiary enjoys. Volume growth and overhead cost rationalization in ECU Line is
providing the operating leverage to increase profitability for Allcargo. We continue to remain
positive on Allcargo due to its global presence through its subsidiary, ECU Line. We expect the
company to benefit from growth in international trade movement and from the recent acquisition
in the high-growth China region.
Estimates revised
We have revised our estimates for CY11 and CY12 to reflect better revenue growth but lower
operating margin. While revenue has been increased marginally by 2.7% to Rs29732mn for CY11
and by 3.4% to Rs23,819mn for CY12, EBITDA has been lowered by 5.0% and 3.3% respectively.
EBIDTA margin estimates have been cut by 91bp to 11.3% and by 84bp to 12.1%, respectively.
Effectively EPS is now lower by 3.0% for CY11 to Rs15.3 but 0.8% higher for CY12 at Rs18.1.
Q4 results mixed; CY10 results in line
Allcargo’s Q4 consolidated revenue grew 25.9% YoY to Rs7,037mn, 8.9% higher than our estimate of
Rs6,460mn following volume growth across segments. However, operating profit at Rs770mn, was
up 82.0% YoY but 13.8% below our estimate of Rs894mn. EBITDA margins contracted 16bp QoQ to
10.9%, 289bp lower than 13.8% estimated on the back of higher operating costs. Net profit at
Rs419mn was 9.6% below our estimates, while net margin at 6.0% was 122bp lower than expected.
Allcargo’s European MTO subsidiary, ECU Line, reported good Q4 performance. Revenue grew
27.4% YoY to Rs5,134mn while EBITDA jumped 63.3% YoY toRs303mn. Net profit after minority
interest increased 251.0% YoY to Rs172mn. Profitability margins improved with OPM up 130bp YoY
to 5.9% and NPM up 213bp YoY at 3.4%.
Standalone revenue grew 27.3% YoY to Rs1,779mn on the back of strong growth across segments
especially CFS which reported a revenue growth of 33.2% YoY and 25.7% QoQ to Rs615mn. The
regrouped Project & Engineering Solutions (combination of the earlier projects cargo and
equipment hiring business) reported a growth of 33.2% YoY to Rs663mn, while the domestic MTO
operations recorded a growth of 12.7% YoY to Rs546mn.
Business outlook positive as volumes remain buoyant
Allcargo reported robust container volumes across segments with overall handling up 17.7% YoY
and 3.2% QOQ at 123,443 TEUs. The CFS segment recorded the highest ever volumes in Q4 at 63,729
containers on the back of robust port volumes and timely capacity expansion.
CFS revenue grew 37.1% YoY due to higher volumes while realisations were stable. CFS volumes
registered a growth of 32.3% YoY to 63,729 TEUs. However, average realisations remained flat, up
3.6% YoY to Rs9,644 per container.
Domestic standalone MTO revenue increased 12.7% on the back of a 24.4% YoY growth in average
realisations to Rs89,643 per TEU even while volumes declined 9.4% to 6,088 containers.
Volumes at the company’s flagship JNPT CFS increased 18.1% YoY (and 5.6% QoQ) to 33,372 TEUs.
Chennai CFS continued its good performance as volumes jumped 48.7% YoY (up 8.2% QoQ) to
20,954 TEUs on the back of the capacity expansion undertaken in August 2010 to 120,000 TEUs p.a.
from 84,000 TEUs earlier. Mundra CFS too reported a growth in volumes during Q3, up 25.9% YoY
and 74.2% QoQ to 7,311 TEUs. Capacity at Mundra too was expanded to 77,000 TEUs p.a. and came
into operations in August 2010.
ECU Line’s Q4 revenue improved 27.4% YoY to Rs5,134mn on the back of volume growth of 7.3%
YoY to 53,626 TEUs while average realisations improved 18.8% YoY to Rs95,738 per container.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Volume growth to drive valuations
Allcargo Global Logistics’ (Allcargo) Q4 results were
mixed compared to estimates. While volume growth
helped boost revenues, cost pressure and margin
contraction led to lower profitability. Container volumes
remained buoyant (up 17.7% YoY and 3.2% QoQ) at
123,443 TEUs. The CFS (container freight station)
segment recorded the highest-ever volume in Q4 at
63,729 containers on the back of robust port volumes
and timely capacity expansion.
Q4 results mixed: Q4 consolidated revenue grew
25.9% YoY to Rs7,037mn, 8.9% higher than estimated.
However, EBITDA margins contracted 16bp QoQ to
10.9%, 289bp lower than 13.8% estimated on the back
of higher operating costs. Net profit at Rs419mn was
9.6% below our estimates, while net margin at 6.0% was
122bp lower than expected.
CY10 results in-line: CY10 consolidated revenue was
2.2% higher than estimated at Rs26,329mn. EBITDA at
Rs2,790mn and PAT at Rs1,706mn were 4.2% and 2.5%
lower than expected.
Maintain Buy; marginally revise estimates: We have
revised our estimates for CY11 and CY12 to reflect
better revenue growth, but lowered operating margin
by 91bp to 11.3% and by 84bp to 12.1% respectively.
EPS is now lower by 3.0% for CY11 to Rs15.3 but 0.8%
higher for CY12 at Rs18.1. We maintain Buy with a target
of Rs217 (earlier: Rs220), rolling forward our valuation to
12x CY12E earnings.
Maintain Buy with target price of Rs217
We maintain Buy rating with a revised price target of Rs217 (earlier: Rs220), rolling forward our
valuation to 12x CY12E earnings. We remain upbeat on the outlook of Allcargo due to growth in
container volumes both in the CFS and MTO operations (ECU Line + domestic MTO) and
improvement in ECU Line margins. At the CMP, the stock trades at 9.3x and 7.8x CY11E and CY12E
earnings, respectively. On EV/EBITDA, the stock trades at 5.5x and 4.0x, respectively. Our target price
of Rs217 discounts 6.4x CY12E EBITDA and 1.7x P/BV.
The company is benefiting from the growth in the ECU Line business and also from the operating
leverage the subsidiary enjoys. Volume growth and overhead cost rationalization in ECU Line is
providing the operating leverage to increase profitability for Allcargo. We continue to remain
positive on Allcargo due to its global presence through its subsidiary, ECU Line. We expect the
company to benefit from growth in international trade movement and from the recent acquisition
in the high-growth China region.
Estimates revised
We have revised our estimates for CY11 and CY12 to reflect better revenue growth but lower
operating margin. While revenue has been increased marginally by 2.7% to Rs29732mn for CY11
and by 3.4% to Rs23,819mn for CY12, EBITDA has been lowered by 5.0% and 3.3% respectively.
EBIDTA margin estimates have been cut by 91bp to 11.3% and by 84bp to 12.1%, respectively.
Effectively EPS is now lower by 3.0% for CY11 to Rs15.3 but 0.8% higher for CY12 at Rs18.1.
Q4 results mixed; CY10 results in line
Allcargo’s Q4 consolidated revenue grew 25.9% YoY to Rs7,037mn, 8.9% higher than our estimate of
Rs6,460mn following volume growth across segments. However, operating profit at Rs770mn, was
up 82.0% YoY but 13.8% below our estimate of Rs894mn. EBITDA margins contracted 16bp QoQ to
10.9%, 289bp lower than 13.8% estimated on the back of higher operating costs. Net profit at
Rs419mn was 9.6% below our estimates, while net margin at 6.0% was 122bp lower than expected.
Allcargo’s European MTO subsidiary, ECU Line, reported good Q4 performance. Revenue grew
27.4% YoY to Rs5,134mn while EBITDA jumped 63.3% YoY toRs303mn. Net profit after minority
interest increased 251.0% YoY to Rs172mn. Profitability margins improved with OPM up 130bp YoY
to 5.9% and NPM up 213bp YoY at 3.4%.
Standalone revenue grew 27.3% YoY to Rs1,779mn on the back of strong growth across segments
especially CFS which reported a revenue growth of 33.2% YoY and 25.7% QoQ to Rs615mn. The
regrouped Project & Engineering Solutions (combination of the earlier projects cargo and
equipment hiring business) reported a growth of 33.2% YoY to Rs663mn, while the domestic MTO
operations recorded a growth of 12.7% YoY to Rs546mn.
Business outlook positive as volumes remain buoyant
Allcargo reported robust container volumes across segments with overall handling up 17.7% YoY
and 3.2% QOQ at 123,443 TEUs. The CFS segment recorded the highest ever volumes in Q4 at 63,729
containers on the back of robust port volumes and timely capacity expansion.
CFS revenue grew 37.1% YoY due to higher volumes while realisations were stable. CFS volumes
registered a growth of 32.3% YoY to 63,729 TEUs. However, average realisations remained flat, up
3.6% YoY to Rs9,644 per container.
Domestic standalone MTO revenue increased 12.7% on the back of a 24.4% YoY growth in average
realisations to Rs89,643 per TEU even while volumes declined 9.4% to 6,088 containers.
Volumes at the company’s flagship JNPT CFS increased 18.1% YoY (and 5.6% QoQ) to 33,372 TEUs.
Chennai CFS continued its good performance as volumes jumped 48.7% YoY (up 8.2% QoQ) to
20,954 TEUs on the back of the capacity expansion undertaken in August 2010 to 120,000 TEUs p.a.
from 84,000 TEUs earlier. Mundra CFS too reported a growth in volumes during Q3, up 25.9% YoY
and 74.2% QoQ to 7,311 TEUs. Capacity at Mundra too was expanded to 77,000 TEUs p.a. and came
into operations in August 2010.
ECU Line’s Q4 revenue improved 27.4% YoY to Rs5,134mn on the back of volume growth of 7.3%
YoY to 53,626 TEUs while average realisations improved 18.8% YoY to Rs95,738 per container.
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