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UBS Investment Research
Petronet LNG
Favourable results
„ Petronet reports EBITDA of Rs3.5bn, in line with our and consensus
Petronet LNG (PLNG) reported top-line of Rs39.9 bn (US$7.0/mmbtu), up 67.1%
YoY and sales of 2.42 MMTPA, which includes 4.5 spot cargoes in Q4FY11.
EBITDA at Rs3.5bn (US$0.62/mmbtu), was in line with our and consensus
estimates. Currently, term contracts are 8.94 MMTPA (includes 7.5 MMTPA Qatar
supply). As per management, current spot cargoes are available at high prices of
cUS$12.0-12.5/mmbtu.
„ Higher other income, lower interest and tax rate improved PAT
PLNG’s interest expenses eased 14.9% QoQ, due to re-financing. Other income
was higher at Rs314m, due interest on income tax refund. Tax rate was ~30% in
Q4FY11. This resulted in a net income of Rs2.06bn in Q4FY11, up 20.7% QoQ
and 112% YoY, above our (on tax, other income) and consensus estimates.
„ Including FY11 results; upgrading FY12E estimates by 8.1%
We have included the reported FY11 income statement and limited balance sheet
details, which have changed our FY11 estimates. We revise upwards our FY12E
and FY13E EPS slightly by 8.1% and 4.6%, respectively, to incorporate higher
volumes (9.5 MMTPA in FY11E) and lower interest expenses. Consultant has
given initial report for a new East Coast terminal, which PLNG may evaluate.
„ Valuation: favourable results; maintain Buy and Rs150 price target
In our view, gas supply constraints and new GAIL pipelines are catalysts for the
stock. We derive our Rs150 price target from a DCF-based methodology and
explicitly forecast long-term valuation drivers using UBS’s VCAM tool.
Q Petronet LNG
Petronet LNG (PLNG) is a joint venture company set up by the government of
India to establish LNG import and regasification facilities. It is primarily a
converter or tolling company. Anticipating the larger role of natural gas supply
in meeting the energy needs of Indian consumers, the Indian government
approved on 4 July 1997 the formation of a joint venture with equity
participation from ONGC, GAIL, Indian Oil, and BPCL at a 12.5% stake for
each. GDF (also known as Gaz de France), which holds another 10% of the
company, is also a strategic partner of the company.
Q Statement of Risk
Petronet LNG buys LNG on long- and short-term contracts, regasifies it and
sells it to the off-takers. Any increase in the input LNG prices due to delay in
liquefaction projects would lead to an increase in the R-LNG ex-terminal prices
and could pose a risk to its utilisation rates or the regasification margins. The
company is expanding its existing capacity and also planning a new terminal.
Both of these involve execution risk.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Petronet LNG
Favourable results
„ Petronet reports EBITDA of Rs3.5bn, in line with our and consensus
Petronet LNG (PLNG) reported top-line of Rs39.9 bn (US$7.0/mmbtu), up 67.1%
YoY and sales of 2.42 MMTPA, which includes 4.5 spot cargoes in Q4FY11.
EBITDA at Rs3.5bn (US$0.62/mmbtu), was in line with our and consensus
estimates. Currently, term contracts are 8.94 MMTPA (includes 7.5 MMTPA Qatar
supply). As per management, current spot cargoes are available at high prices of
cUS$12.0-12.5/mmbtu.
„ Higher other income, lower interest and tax rate improved PAT
PLNG’s interest expenses eased 14.9% QoQ, due to re-financing. Other income
was higher at Rs314m, due interest on income tax refund. Tax rate was ~30% in
Q4FY11. This resulted in a net income of Rs2.06bn in Q4FY11, up 20.7% QoQ
and 112% YoY, above our (on tax, other income) and consensus estimates.
„ Including FY11 results; upgrading FY12E estimates by 8.1%
We have included the reported FY11 income statement and limited balance sheet
details, which have changed our FY11 estimates. We revise upwards our FY12E
and FY13E EPS slightly by 8.1% and 4.6%, respectively, to incorporate higher
volumes (9.5 MMTPA in FY11E) and lower interest expenses. Consultant has
given initial report for a new East Coast terminal, which PLNG may evaluate.
„ Valuation: favourable results; maintain Buy and Rs150 price target
In our view, gas supply constraints and new GAIL pipelines are catalysts for the
stock. We derive our Rs150 price target from a DCF-based methodology and
explicitly forecast long-term valuation drivers using UBS’s VCAM tool.
Q Petronet LNG
Petronet LNG (PLNG) is a joint venture company set up by the government of
India to establish LNG import and regasification facilities. It is primarily a
converter or tolling company. Anticipating the larger role of natural gas supply
in meeting the energy needs of Indian consumers, the Indian government
approved on 4 July 1997 the formation of a joint venture with equity
participation from ONGC, GAIL, Indian Oil, and BPCL at a 12.5% stake for
each. GDF (also known as Gaz de France), which holds another 10% of the
company, is also a strategic partner of the company.
Q Statement of Risk
Petronet LNG buys LNG on long- and short-term contracts, regasifies it and
sells it to the off-takers. Any increase in the input LNG prices due to delay in
liquefaction projects would lead to an increase in the R-LNG ex-terminal prices
and could pose a risk to its utilisation rates or the regasification margins. The
company is expanding its existing capacity and also planning a new terminal.
Both of these involve execution risk.
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