Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Adani Enterprises
Upgrade to Neutral post correction
AEL stock price has corrected ~19% over the last three months
AEL (Adani Enterprises) has under-performed the market by 9% over the last three
months. We upgrade our rating to Neutral post the correction. There has been good
progress in AEL’s power and port businesses. In December, Adani Power
synchronized its first super-critical unit of 660MW and the company expects to
commission entire 4,620MW in Mundra by FY12. Mundra Port has also
commissioned its coal terminal of 60mt handling capacity in December-10.
AEL is a good play on rising energy consumption in the country
AEL is strongly levered to growing energy consumption in India in our view
through - 1) Adani Power (30% of our SOTP; target capacity of 15,000MW by
FY17, we currently value 9,900MW), 2) contract coal mining for State Electricity
Boards (18% of our SOTP; 110mt likely by FY18), 3) coal trading (7% of our
SOTP; largest coal importer in the country with ~50mt likely by FY13) and 4)
Mundra Port (35% of our SOTP; will have ~35% of volumes from coal by FY13).
Revise earnings estimates
We revise our earnings estimates downwards to Rs21.2/30.6/53.1 from
Rs25.7/35.3/61.8 for FY11/12/13E, as we factor in lower margins in the coal
trading and some of the other businesses (other than port and power) of AEL.
Valuation: Revise SOTP-based PT to Rs685
We revise our PT to Rs685 from Rs720 led by revision in our earnings estimates.
Key upside risks arise from further project wins in the contract coal mining
business (a few projects likely to come up for bidding soon).
Update on various coal-related projects
Preparatory works and feasibility studies are on for the various coal-related
projects of AEL (Please refer our note Prefer the subsidiaries, Downgrade to
Sell dated 11 November 2010).
Indian contract coal mining: AEL expects to get the forest/environmental
clearance in the next three to four months for the Parsa-Kente mines. It has
started procuring equipment and the mine is likely to commence production in
FY12. Geological and hydrological studies are being undertaken in the
Macchakatta mines which will get completed in the next few months. This mine
is slated to commence production in FY13.
Australian mine: Newsflow suggests that AEL is likely to 1) invest about
US$7bn in the coal mine and associated rail/port projects and 2) commence
production by end-2014 and ramp up to 50-60mt by 2022. AEL has started its
operations in Australia and is evaluating the various evacuation routes for the
coal. The project cost details are likely to be finalized post that.
Indonesia coal purchase rights: AEL has signed the agreement with the
Regional Government of Sumatra Selatan, Indonesia and PT Bukit Asam in
January. The total estimated project cost is US$1.65bn. AEL has also signed an
MoU for exploring the feasibility of developing a 2X 1,100MW or 3X 660MW
lignite based power plant in Indonesia.
As per recent newsflow, AEL might be interested in the ten-year thermal coal
import programme of Coal India (this might be expanded to 20mtpa and will
likely commence in 2011-12). This might provide a long-term customer to AEL
for its coal from the Australian and Indonesian mines (in addition to the group
requirements in Adani Power).
AEL reportedly plans to invest about US$1.5bn in purchasing 20 ships over the
next five years for the transportation of coal from Australia and Indonesia. It
currently has on order fours ships for an estimated cost of US$250m.
Changes in estimates
We revise our earnings estimates to factor lower margins in coal and the other
businesses of AEL. We maintain our estimates for Mundra Port and Adani
Power
Valuation: PT of Rs685
We derive our SOTP-based PT on 1) 10% holding company discount to our PT
for listed subsidiaries (Mundra Port PT Rs190; Adani Power PT Rs160), 2) DCF
of individual assets in different segments like mining, agri, real estate and
others, and 3) 3.5x EV/EBITDA for trading businesses.
Adani Enterprises
Founded in 1988 by Gautam S Adani, Adani Enterprises is the flagship
company of the Adani Group. It has several businesses such as power generation
and trading, coal mining and trading, edible oil manufacturing, agri-logistics and
trading, real estate development, trading in metals, city gas distribution,
bunkering, and oil & gas.
Statement of Risk
The key risks that AEL is exposed to in our view include: 1) Fuel cost from
Indonesia might be higher or availability could be lower, 2) sharp decline in
merchant tariffs, 3) lack of sufficient track record of Chinese power equipment
with Indian coal, 4) execution risks across businesses, especially power and
mining, and 5) lower-than-expected efficiencies in Indian coal mining
operations.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Adani Enterprises
Upgrade to Neutral post correction
AEL stock price has corrected ~19% over the last three months
AEL (Adani Enterprises) has under-performed the market by 9% over the last three
months. We upgrade our rating to Neutral post the correction. There has been good
progress in AEL’s power and port businesses. In December, Adani Power
synchronized its first super-critical unit of 660MW and the company expects to
commission entire 4,620MW in Mundra by FY12. Mundra Port has also
commissioned its coal terminal of 60mt handling capacity in December-10.
AEL is a good play on rising energy consumption in the country
AEL is strongly levered to growing energy consumption in India in our view
through - 1) Adani Power (30% of our SOTP; target capacity of 15,000MW by
FY17, we currently value 9,900MW), 2) contract coal mining for State Electricity
Boards (18% of our SOTP; 110mt likely by FY18), 3) coal trading (7% of our
SOTP; largest coal importer in the country with ~50mt likely by FY13) and 4)
Mundra Port (35% of our SOTP; will have ~35% of volumes from coal by FY13).
Revise earnings estimates
We revise our earnings estimates downwards to Rs21.2/30.6/53.1 from
Rs25.7/35.3/61.8 for FY11/12/13E, as we factor in lower margins in the coal
trading and some of the other businesses (other than port and power) of AEL.
Valuation: Revise SOTP-based PT to Rs685
We revise our PT to Rs685 from Rs720 led by revision in our earnings estimates.
Key upside risks arise from further project wins in the contract coal mining
business (a few projects likely to come up for bidding soon).
Update on various coal-related projects
Preparatory works and feasibility studies are on for the various coal-related
projects of AEL (Please refer our note Prefer the subsidiaries, Downgrade to
Sell dated 11 November 2010).
Indian contract coal mining: AEL expects to get the forest/environmental
clearance in the next three to four months for the Parsa-Kente mines. It has
started procuring equipment and the mine is likely to commence production in
FY12. Geological and hydrological studies are being undertaken in the
Macchakatta mines which will get completed in the next few months. This mine
is slated to commence production in FY13.
Australian mine: Newsflow suggests that AEL is likely to 1) invest about
US$7bn in the coal mine and associated rail/port projects and 2) commence
production by end-2014 and ramp up to 50-60mt by 2022. AEL has started its
operations in Australia and is evaluating the various evacuation routes for the
coal. The project cost details are likely to be finalized post that.
Indonesia coal purchase rights: AEL has signed the agreement with the
Regional Government of Sumatra Selatan, Indonesia and PT Bukit Asam in
January. The total estimated project cost is US$1.65bn. AEL has also signed an
MoU for exploring the feasibility of developing a 2X 1,100MW or 3X 660MW
lignite based power plant in Indonesia.
As per recent newsflow, AEL might be interested in the ten-year thermal coal
import programme of Coal India (this might be expanded to 20mtpa and will
likely commence in 2011-12). This might provide a long-term customer to AEL
for its coal from the Australian and Indonesian mines (in addition to the group
requirements in Adani Power).
AEL reportedly plans to invest about US$1.5bn in purchasing 20 ships over the
next five years for the transportation of coal from Australia and Indonesia. It
currently has on order fours ships for an estimated cost of US$250m.
Changes in estimates
We revise our earnings estimates to factor lower margins in coal and the other
businesses of AEL. We maintain our estimates for Mundra Port and Adani
Power
Valuation: PT of Rs685
We derive our SOTP-based PT on 1) 10% holding company discount to our PT
for listed subsidiaries (Mundra Port PT Rs190; Adani Power PT Rs160), 2) DCF
of individual assets in different segments like mining, agri, real estate and
others, and 3) 3.5x EV/EBITDA for trading businesses.
Adani Enterprises
Founded in 1988 by Gautam S Adani, Adani Enterprises is the flagship
company of the Adani Group. It has several businesses such as power generation
and trading, coal mining and trading, edible oil manufacturing, agri-logistics and
trading, real estate development, trading in metals, city gas distribution,
bunkering, and oil & gas.
Statement of Risk
The key risks that AEL is exposed to in our view include: 1) Fuel cost from
Indonesia might be higher or availability could be lower, 2) sharp decline in
merchant tariffs, 3) lack of sufficient track record of Chinese power equipment
with Indian coal, 4) execution risks across businesses, especially power and
mining, and 5) lower-than-expected efficiencies in Indian coal mining
operations.
No comments:
Post a Comment