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Steady volumes to boost revenues
We maintain our positive view on container based logistics
players with a Buy rating on Allcargo Global Logistics,
Gateway Distriparks (GDL) and Transport Corporation of
India (TCI). We have a Hold on Container Corporation
(Concor) due to its higher valuations and slower growth.
We expect container volumes at 12 major ports to remain
steady and estimate a 10.2% volume growth (in TEU terms)
for FY12E and 10.0% growth for FY13E.
Container volumes steady: Container traffic at the 12
major ports remained steady during Q4 as volumes grew
5.5% YoY to 1.94mn TEUs and 9.4% for FY11 to 7.5mn
TEUs. Volumes at India’s largest container port JNPT too
grew 4.4% to 4.3mn TEUs in FY11. Container traffic
outperformed total port traffic which grew just 2.9% in
Q4FY11.
EXIM trade robust during Q4: India’s exports and
imports continued its growth during Q4. While exports
grew 41.1% YoY in value terms during January-February
2011, imports registered a growth of 17.3% YoY during
the same period. This surge in EXIM trade also percolated
into container volumes which out-grew other
commodities in FY11. During Q3, exports had grown at
28.4% YoY while imports grew just 1.8% YoY.
Domestic industrial activity: India’s Index of Industrial
Production (IIP) however remained lacklustre for the last
couple of months with growth ranging between 3-4%.
During January 2011 it grew 3.7% YoY. We believe this
slower pace of growth would lead to lower demand for
domestic logistics services and impact pure transporters
of goods.
Hike in container rail haulage charges: Indian Railways
increased the haulage rates by 45-100% on nine
commodities to be moved domestically in containers
w.e.f. 1-Dec-10. We expect this to have a negative impact
on private rail operators as they have a higher share in the
domestic segment. IR has also increased the EXIM haulage
charges by 3-4% which is effective from Jan 2011.
Allcargo - Top pick in the sector: Allcargo is our top pick
in the overall logistics space with a Buy rating and a target
of Rs217 on back of attractive valuations of 9.4x CY12E
and global presence. We believe Concor is looking fully
valued at the current level of 15.2x FY13E earnings and
maintain Hold with a negative bias and a target of
Rs1,290. We maintain Buy rating on TCI (target price
Rs143) and GDL (Rs133).
Allcargo Global (Rating – Buy; Target Price – Rs217)
Consolidated revenue is likely to increase 23.7% YoY to Rs7,245mn, primarily led by growth in
container volumes in the CFS and ECU Line business. Operating profits are expected to grow
42.6% YoY to Rs816mn on back of 150bp YoY expansion in margins to 11.3%.
Volumes in the CFS (container freight station) business are likely to grow 12.5% YoY (0.5% QoQ)
to 64,075 TEUs, while the global MTO (multi-modal transport operation) business (ECU Line)
volume is expected to increase 22.2% YoY (9.2% QoQ) to 58,538 TEUs.
Container Corp of India (Rating – Hold; Target Price – Rs1,290)
We expect standalone revenue to improve 12.2% YoY to Rs10,666mn, mainly led by volume
growth in the EXIM segment.
EXIM segment’s volumes are expected to be buoyant with an 8.1% YoY growth to 530,341 TEUs.
However, the domestic business’ volumes are likely to decline 1.1% YoY to 150,823 TEUs due to
the impact of the hike in domestic haulage charges by Indian railways.
Operating profit is expected to improve 28.0% YoY, but remain flat QoQ at Rs2,818mn.
Operating margins are likely to contract 248bp QoQ (up 326bp YoY) to 26.4% on back of
increase in haulage charges in the domestic segment.
Gateway Distriparks (Rating – Buy; Target Price – Rs133)
GDL’s standalone CFS revenue is expected to increase 26.3% YoY but go down 3.8% QoQ to
Rs500mn. Net profit is likely to remain stable, up 8.1% YoY to 234mn on back of higher taxes
and lower realisations.
We expect the consolidated total income (revenue + other income) to grow 12.7% YoY to
Rs1,565mn and operating profit by 10.6% to Rs4330mn. However, operating margins are likely
to decline 52bp YoY to 27.7% as increase in rail cost (haulage charges) is likely to impact overall
profitability.
Container volume at the Mumbai CFS is likely to increase 25.0% YoY to 62,473 TEUs largely due
to the improvement in JN port’s volumes during Q4 and operations at its 2nd CFS (Punjab
Conware) improving.
The rail business subsidiary, Gateway Rail Freight (GRFL), is expected to register 3.4% YoY
revenue growth to Rs799mn. Though we expect a 23.4% YoY increase in volumes to 36,846
TEUs, realisations are likely to decline 16.1% YoY to Rs21,700 per container.
Transport Corporation (Rating – Buy; Target Price – Rs143)
TCI’s standalone revenue is expected to rise 12.0% YoY to Rs4,503mn on back of growth in the
express and supply chain business.
Operating profit is likely to remain flat, up 2.3% YoY but down 1.0% QoQ to Rs332mn, while
margins are likely decline 70bp YoY and 17bp QoQ to 7.4%. Net profit is likely to decline 1.6%
YoY to Rs123mn on the back of a 38bp decline in net margin to 2.7%.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Steady volumes to boost revenues
We maintain our positive view on container based logistics
players with a Buy rating on Allcargo Global Logistics,
Gateway Distriparks (GDL) and Transport Corporation of
India (TCI). We have a Hold on Container Corporation
(Concor) due to its higher valuations and slower growth.
We expect container volumes at 12 major ports to remain
steady and estimate a 10.2% volume growth (in TEU terms)
for FY12E and 10.0% growth for FY13E.
Container volumes steady: Container traffic at the 12
major ports remained steady during Q4 as volumes grew
5.5% YoY to 1.94mn TEUs and 9.4% for FY11 to 7.5mn
TEUs. Volumes at India’s largest container port JNPT too
grew 4.4% to 4.3mn TEUs in FY11. Container traffic
outperformed total port traffic which grew just 2.9% in
Q4FY11.
EXIM trade robust during Q4: India’s exports and
imports continued its growth during Q4. While exports
grew 41.1% YoY in value terms during January-February
2011, imports registered a growth of 17.3% YoY during
the same period. This surge in EXIM trade also percolated
into container volumes which out-grew other
commodities in FY11. During Q3, exports had grown at
28.4% YoY while imports grew just 1.8% YoY.
Domestic industrial activity: India’s Index of Industrial
Production (IIP) however remained lacklustre for the last
couple of months with growth ranging between 3-4%.
During January 2011 it grew 3.7% YoY. We believe this
slower pace of growth would lead to lower demand for
domestic logistics services and impact pure transporters
of goods.
Hike in container rail haulage charges: Indian Railways
increased the haulage rates by 45-100% on nine
commodities to be moved domestically in containers
w.e.f. 1-Dec-10. We expect this to have a negative impact
on private rail operators as they have a higher share in the
domestic segment. IR has also increased the EXIM haulage
charges by 3-4% which is effective from Jan 2011.
Allcargo - Top pick in the sector: Allcargo is our top pick
in the overall logistics space with a Buy rating and a target
of Rs217 on back of attractive valuations of 9.4x CY12E
and global presence. We believe Concor is looking fully
valued at the current level of 15.2x FY13E earnings and
maintain Hold with a negative bias and a target of
Rs1,290. We maintain Buy rating on TCI (target price
Rs143) and GDL (Rs133).
Allcargo Global (Rating – Buy; Target Price – Rs217)
Consolidated revenue is likely to increase 23.7% YoY to Rs7,245mn, primarily led by growth in
container volumes in the CFS and ECU Line business. Operating profits are expected to grow
42.6% YoY to Rs816mn on back of 150bp YoY expansion in margins to 11.3%.
Volumes in the CFS (container freight station) business are likely to grow 12.5% YoY (0.5% QoQ)
to 64,075 TEUs, while the global MTO (multi-modal transport operation) business (ECU Line)
volume is expected to increase 22.2% YoY (9.2% QoQ) to 58,538 TEUs.
Container Corp of India (Rating – Hold; Target Price – Rs1,290)
We expect standalone revenue to improve 12.2% YoY to Rs10,666mn, mainly led by volume
growth in the EXIM segment.
EXIM segment’s volumes are expected to be buoyant with an 8.1% YoY growth to 530,341 TEUs.
However, the domestic business’ volumes are likely to decline 1.1% YoY to 150,823 TEUs due to
the impact of the hike in domestic haulage charges by Indian railways.
Operating profit is expected to improve 28.0% YoY, but remain flat QoQ at Rs2,818mn.
Operating margins are likely to contract 248bp QoQ (up 326bp YoY) to 26.4% on back of
increase in haulage charges in the domestic segment.
Gateway Distriparks (Rating – Buy; Target Price – Rs133)
GDL’s standalone CFS revenue is expected to increase 26.3% YoY but go down 3.8% QoQ to
Rs500mn. Net profit is likely to remain stable, up 8.1% YoY to 234mn on back of higher taxes
and lower realisations.
We expect the consolidated total income (revenue + other income) to grow 12.7% YoY to
Rs1,565mn and operating profit by 10.6% to Rs4330mn. However, operating margins are likely
to decline 52bp YoY to 27.7% as increase in rail cost (haulage charges) is likely to impact overall
profitability.
Container volume at the Mumbai CFS is likely to increase 25.0% YoY to 62,473 TEUs largely due
to the improvement in JN port’s volumes during Q4 and operations at its 2nd CFS (Punjab
Conware) improving.
The rail business subsidiary, Gateway Rail Freight (GRFL), is expected to register 3.4% YoY
revenue growth to Rs799mn. Though we expect a 23.4% YoY increase in volumes to 36,846
TEUs, realisations are likely to decline 16.1% YoY to Rs21,700 per container.
Transport Corporation (Rating – Buy; Target Price – Rs143)
TCI’s standalone revenue is expected to rise 12.0% YoY to Rs4,503mn on back of growth in the
express and supply chain business.
Operating profit is likely to remain flat, up 2.3% YoY but down 1.0% QoQ to Rs332mn, while
margins are likely decline 70bp YoY and 17bp QoQ to 7.4%. Net profit is likely to decline 1.6%
YoY to Rs123mn on the back of a 38bp decline in net margin to 2.7%.
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