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Petronet LNG
We met Petronet LNG (PLNG) at the Namaste India conference. The key takeaways from the
meeting were:
�� Kochi LNG terminal on track: The Kochi LNG terminal is on track for commissioning in
June 2012 for the first 2.5mmtpa capacity and October 2012 for the full 5mmtpa
capacity. Management expects Kochi terminal to achieve 100% capacity utilization
within 1.5 yrs of commissioning.
�� Long-term LNG supply tie-up for Kochi: PLNG has already tied-up 1.5mmtpa LNG
sourcing contract for 20 yrs with Gorgon project in Australia at about 14% linkage to
Japanese Crude Cocktail (JCC). It does not intend to enter into any long-term LNG
sourcing contract for the balance 3.5mmtpa of Kochi terminal capacity at current level of
prices.
�� Offtake outlook for Kochi: The risk for offtake of 1.5mmtpa long-term LNG tie-up is
with the offtakers BPCL, GAIL and IOC in the ratio of 40:30:30 respectively. Besides the
1.5mmtpa offtake quantity already contracted with NTPC, the other key potential
customers are BPCL Kochi refinery (0.4mmtpa), FACT (0.4mmtpa) and BSES Kerala
power plant (0.2mmtpa). We expect high utilisation levels at Kochi terminal as the region
is already starved of gas and there is no major gas supply source.
�� Dahej LNG terminal: Management has guided for 100% capacity utilization at its
10mmtpa Dahej terminal upto maximum 10.25mmtpa. It is also looking for tying up
additional medium-term LNG contracts besides the 1.1mmtpa it has already contracted
with Marubeni last year.
�� Reiterate Buy on 3-yr volume CAGR of +13% :We reiterate our Buy on PLNG with a
target price of INR150 on the back of +13% CAGR in LNG volumes over the next three
years till FY13, driving capacity utilization at Dahej terminal to over 100%. The expected
commissioning of its 5mmtpa Kochi LNG terminal in FY13 would further boost its
earnings from FY14 onwards. We expect ROE to increase to 29.7% in FY14E from FY10
levels of 19.2%. With ramp-up in KG D6 gas production to 80mmscmd unlikely in the
near term, PLNG is the key beneficiary and one of our top picks on the India natural gas
consumption theme.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Petronet LNG
We met Petronet LNG (PLNG) at the Namaste India conference. The key takeaways from the
meeting were:
�� Kochi LNG terminal on track: The Kochi LNG terminal is on track for commissioning in
June 2012 for the first 2.5mmtpa capacity and October 2012 for the full 5mmtpa
capacity. Management expects Kochi terminal to achieve 100% capacity utilization
within 1.5 yrs of commissioning.
�� Long-term LNG supply tie-up for Kochi: PLNG has already tied-up 1.5mmtpa LNG
sourcing contract for 20 yrs with Gorgon project in Australia at about 14% linkage to
Japanese Crude Cocktail (JCC). It does not intend to enter into any long-term LNG
sourcing contract for the balance 3.5mmtpa of Kochi terminal capacity at current level of
prices.
�� Offtake outlook for Kochi: The risk for offtake of 1.5mmtpa long-term LNG tie-up is
with the offtakers BPCL, GAIL and IOC in the ratio of 40:30:30 respectively. Besides the
1.5mmtpa offtake quantity already contracted with NTPC, the other key potential
customers are BPCL Kochi refinery (0.4mmtpa), FACT (0.4mmtpa) and BSES Kerala
power plant (0.2mmtpa). We expect high utilisation levels at Kochi terminal as the region
is already starved of gas and there is no major gas supply source.
�� Dahej LNG terminal: Management has guided for 100% capacity utilization at its
10mmtpa Dahej terminal upto maximum 10.25mmtpa. It is also looking for tying up
additional medium-term LNG contracts besides the 1.1mmtpa it has already contracted
with Marubeni last year.
�� Reiterate Buy on 3-yr volume CAGR of +13% :We reiterate our Buy on PLNG with a
target price of INR150 on the back of +13% CAGR in LNG volumes over the next three
years till FY13, driving capacity utilization at Dahej terminal to over 100%. The expected
commissioning of its 5mmtpa Kochi LNG terminal in FY13 would further boost its
earnings from FY14 onwards. We expect ROE to increase to 29.7% in FY14E from FY10
levels of 19.2%. With ramp-up in KG D6 gas production to 80mmscmd unlikely in the
near term, PLNG is the key beneficiary and one of our top picks on the India natural gas
consumption theme.
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