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Container Corporation (CCRI)
Infrastructure
Domestic struggles, exim may pick up. Key highlights from Concor’s conference call
(1) domestic volumes struggle post recent policy change on bulk commodities in
container; likely to impact FY2012E, (2) exim volume growth impacted by de-stuffing at
ports-side CFS, may improve on better export volumes, slow imports may hurt, (4)
FY2012E 10% growth guidance lower than estimates likely on lower domestic volumes.
Retain REDUCE rating, revise our TP to Rs1,350 based on 16X FY2013E (from Rs1,300).
Policy change almost completely wipes out domestic growth; likely to impact FY12 growth as well
Decline in domestic volumes in 4QFY11 (down 8.5% yoy) was primarily led by recent railway policy
change implemented from Dec-2010. Higher haulage cost on the specified commodities led to a
loss of almost the entire volumes almost completely wiping out the growth seen till Nov-10. Note
that this is likely to impact yoy growth figures in FY2012E as well, since the first eight months of
FY2011 were not impacted by the policy change. This could potentially lead to a decline in
domestic volumes handled in FY2012E versus our estimate of flat volumes.
De-stuffing at port-side CFS results in exim lagging port volume growth; may improve
Concor reported exim volume growth of about 7.2% yoy versus 9.5% in total container volume at
major ports (growth would be higher including Mundra and Pipavav). This lag versus port volume
growth was attributed to increased de-stuffing of containers at the port-side CSF itself - done by
shipping line with an aim to lower empties due to exim imbalance. However, export volumes have
picked up in recent months, likely leading to some restoration in the exim balance. This may lead
to lower de-stuffing at port-side CFS, thus realigning Concor’s exim growth to port volume
growth. Potential slowdown in imports and loss of market share remain concerns.
10% growth guidance lower than estimates; likely on volume de-growth in domestic segment
Concor management guided for a revenue growth of 10% in FY2012E, below our estimate of
12-13%. The miss-match is likely on account of potential de-growth in domestic volumes versus
our estimate of flat volumes. We build in 10% growth in exim volumes and nil growth in domestic
volumes in FY2012E (9% growth in overall volumes).
Revise estimates on lower domestic volumes; retain REDUCE with a target price of Rs1,350
We revise our estimates to Rs73.5 and Rs83.7 from Rs77.5 and Rs88.2 for FY2012E and FY2013E,
respectively. We retain our REDUCE rating (revised TP of Rs1,350 based on 16X FY2013E from
Rs1,300) on (1) sluggishness in domestic segment, (2) potentially slower exim growth as imports
growth slow and competitors shift capacity to exim from domestic amidst relatively slow growth,
particularly imports and (3) current valuation doesn’t leave upside.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Container Corporation (CCRI)
Infrastructure
Domestic struggles, exim may pick up. Key highlights from Concor’s conference call
(1) domestic volumes struggle post recent policy change on bulk commodities in
container; likely to impact FY2012E, (2) exim volume growth impacted by de-stuffing at
ports-side CFS, may improve on better export volumes, slow imports may hurt, (4)
FY2012E 10% growth guidance lower than estimates likely on lower domestic volumes.
Retain REDUCE rating, revise our TP to Rs1,350 based on 16X FY2013E (from Rs1,300).
Policy change almost completely wipes out domestic growth; likely to impact FY12 growth as well
Decline in domestic volumes in 4QFY11 (down 8.5% yoy) was primarily led by recent railway policy
change implemented from Dec-2010. Higher haulage cost on the specified commodities led to a
loss of almost the entire volumes almost completely wiping out the growth seen till Nov-10. Note
that this is likely to impact yoy growth figures in FY2012E as well, since the first eight months of
FY2011 were not impacted by the policy change. This could potentially lead to a decline in
domestic volumes handled in FY2012E versus our estimate of flat volumes.
De-stuffing at port-side CFS results in exim lagging port volume growth; may improve
Concor reported exim volume growth of about 7.2% yoy versus 9.5% in total container volume at
major ports (growth would be higher including Mundra and Pipavav). This lag versus port volume
growth was attributed to increased de-stuffing of containers at the port-side CSF itself - done by
shipping line with an aim to lower empties due to exim imbalance. However, export volumes have
picked up in recent months, likely leading to some restoration in the exim balance. This may lead
to lower de-stuffing at port-side CFS, thus realigning Concor’s exim growth to port volume
growth. Potential slowdown in imports and loss of market share remain concerns.
10% growth guidance lower than estimates; likely on volume de-growth in domestic segment
Concor management guided for a revenue growth of 10% in FY2012E, below our estimate of
12-13%. The miss-match is likely on account of potential de-growth in domestic volumes versus
our estimate of flat volumes. We build in 10% growth in exim volumes and nil growth in domestic
volumes in FY2012E (9% growth in overall volumes).
Revise estimates on lower domestic volumes; retain REDUCE with a target price of Rs1,350
We revise our estimates to Rs73.5 and Rs83.7 from Rs77.5 and Rs88.2 for FY2012E and FY2013E,
respectively. We retain our REDUCE rating (revised TP of Rs1,350 based on 16X FY2013E from
Rs1,300) on (1) sluggishness in domestic segment, (2) potentially slower exim growth as imports
growth slow and competitors shift capacity to exim from domestic amidst relatively slow growth,
particularly imports and (3) current valuation doesn’t leave upside.
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