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Container Corporation (CCRI)
Infrastructure
Margins disappoint similar to last year; possibly led by volume discounts in 4Q.
Concor reported 4QFY11 revenues of Rs9.9 bn up 4.7% yoy but 6.4% below estimates
due to lower-than-expected exim sales. EBITDA margins were flat yoy and contracted
qoq (repeat of 4QFY10) possibly due to greater share of volume discounts. Domestic
margins declined significantly due to full impact of rail freight policy change. PAT of Rs2
bn was 15% below estimate implying lower tax rate. Retain REDUCE; TP of Rs1,300
Lower-than-expected exim sales resulting in revenue miss
Concor reported 4QFY11 revenues of Rs9.9 bn, up 4.7% yoy and 6.5% below estimates. Exim
sales of Rs7.8 bn were up 7.7% yoy but significantly lower than our estimate of Rs8.6 bn.
Domestic sales of Rs2.1 bn were down 5% yoy (Rs2.2 bn in 4QFY10). This may be led by the fact
that the company faced the first full quarter of freight rate policy changes on bulk commodities.
EBITDA margins flat yoy and below estimates; possibly driven by discounts
Concor reported EBITDA margins of 23.4% for 4QFY11, flat yoy and 380 bps below our estimate
of 27.2%. Margin contraction was led by higher freight expense of 58.4% as percentage of sales
versus 55.3% in 3QFY11. We believe that the company has a policy of booking majority of their
volume discounts in 4Q which led to the margin compression. Similar trend was seen in 4QFY10
when margins compressed sequentially to 23.2% in 4Q from 28.8% in 3Q. Exim margins
expanded to 24.6% (22.1% in 4QFY10) possibly as a result of better empties control supported by
better exim balance. Sequential decline is in line with likely explanation of volume discounts.
Domestic margins halved to 8.4% from 16.1 as the company faced full brunt of the change in
freight rate policy on bulk commodities. Concor reported a 4QFY11 PAT of Rs2 bn, about 15%
below our estimates of Rs2.4 bn implying lower tax rate of about 18% versus 22% in 4QFY10.
FY2011: Muted revenue growth and flat margins miss estimates; cash levels rise
Concor reported full year revenues of Rs38.2 bn, up 3.4% yoy and 1.8% below our estimates. Flat
yoy margins at 26.7% (100 bps below expectations) resulted in a PAT of Rs8.3 bn versus estimate
of Rs8.6 bn and FY2010 level of Rs7.8 bn (up 6.6%yoy). The cash levels of the company stood at
Rs23.6 bn at FY2011-end from Rs19.8 bn at FY2010-end.
Reiterate REDUCE with a TP of Rs1,300; will revisit estimates post today’s conference call
Retain REDUCE with a revised TP of Rs1,300 (from Rs1,250) based on (1) lower-than-expected
traction in volume pick-up, (2) potential further loss of market share to competitors as they scale
up operations affecting volume growth and (3) current valuation doesn’t leave upside. We value
the business at 16X FY2012E earnings and ascribe an additional Rs50 to its investments.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Container Corporation (CCRI)
Infrastructure
Margins disappoint similar to last year; possibly led by volume discounts in 4Q.
Concor reported 4QFY11 revenues of Rs9.9 bn up 4.7% yoy but 6.4% below estimates
due to lower-than-expected exim sales. EBITDA margins were flat yoy and contracted
qoq (repeat of 4QFY10) possibly due to greater share of volume discounts. Domestic
margins declined significantly due to full impact of rail freight policy change. PAT of Rs2
bn was 15% below estimate implying lower tax rate. Retain REDUCE; TP of Rs1,300
Lower-than-expected exim sales resulting in revenue miss
Concor reported 4QFY11 revenues of Rs9.9 bn, up 4.7% yoy and 6.5% below estimates. Exim
sales of Rs7.8 bn were up 7.7% yoy but significantly lower than our estimate of Rs8.6 bn.
Domestic sales of Rs2.1 bn were down 5% yoy (Rs2.2 bn in 4QFY10). This may be led by the fact
that the company faced the first full quarter of freight rate policy changes on bulk commodities.
EBITDA margins flat yoy and below estimates; possibly driven by discounts
Concor reported EBITDA margins of 23.4% for 4QFY11, flat yoy and 380 bps below our estimate
of 27.2%. Margin contraction was led by higher freight expense of 58.4% as percentage of sales
versus 55.3% in 3QFY11. We believe that the company has a policy of booking majority of their
volume discounts in 4Q which led to the margin compression. Similar trend was seen in 4QFY10
when margins compressed sequentially to 23.2% in 4Q from 28.8% in 3Q. Exim margins
expanded to 24.6% (22.1% in 4QFY10) possibly as a result of better empties control supported by
better exim balance. Sequential decline is in line with likely explanation of volume discounts.
Domestic margins halved to 8.4% from 16.1 as the company faced full brunt of the change in
freight rate policy on bulk commodities. Concor reported a 4QFY11 PAT of Rs2 bn, about 15%
below our estimates of Rs2.4 bn implying lower tax rate of about 18% versus 22% in 4QFY10.
FY2011: Muted revenue growth and flat margins miss estimates; cash levels rise
Concor reported full year revenues of Rs38.2 bn, up 3.4% yoy and 1.8% below our estimates. Flat
yoy margins at 26.7% (100 bps below expectations) resulted in a PAT of Rs8.3 bn versus estimate
of Rs8.6 bn and FY2010 level of Rs7.8 bn (up 6.6%yoy). The cash levels of the company stood at
Rs23.6 bn at FY2011-end from Rs19.8 bn at FY2010-end.
Reiterate REDUCE with a TP of Rs1,300; will revisit estimates post today’s conference call
Retain REDUCE with a revised TP of Rs1,300 (from Rs1,250) based on (1) lower-than-expected
traction in volume pick-up, (2) potential further loss of market share to competitors as they scale
up operations affecting volume growth and (3) current valuation doesn’t leave upside. We value
the business at 16X FY2012E earnings and ascribe an additional Rs50 to its investments.
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