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Mundra Port & SEZ Ltd.
In-line Results; Growth pricedin
„Rec PAT +32% as coal & containers drive cargo +35%YoY
MSEZ 4QFY11 Rec. PAT Rs2.6bn +32%YoY was 6% below BofAMLe on higher
tax (15% v/s 7%) on start of coal terminal. Fall in port tariffs by 5%YoY led to port
income +28%YoY despite 35%YoY growth of cargo volume. We hike our FY12-
13E cargo assumption by 4-9% on start of SPM 2 but maintain PO on 25bps hike
in cost of equity to factor-in rising 10-year bond. Maintain Neutral despite a
compelling assets on initial lower return on acquisitions, with lower stock upside
potential v/s other developers in our coverage. We believe its EPS CAGR of 32%
over FY11-13E is reflected in its premium valuations at 23x FY12E EPS.
Coal 2x drive ASP down, fertilizer +84% & container +22%
Mundra Port saw 4Q cargo of 14.1mmT led by lower ASP coal +108%, while high
ASP container cargo grew at muted 22%YoY. 4QFY11 Rec. PAT grew +32%YoY
(-6% BofAMLe) on higher tax (15% v/s 7%) on start of coal terminal. However, 4Q
Reported PAT came-in at Rs3.3bn +74%YoY on Rs742mn (net of tax) of prior
period land lease income accounted on change in accounting policy & Rs41mn
derivative loss vs Rs222mn prior period income reversal and Rs144mn exchange
gain in 4Q10.
East port & APCT/Dudgeon Point +ves but to up capex/lower RoE
MSEZ is scaling-up its ports business – it has bagged ports at Goa & Hazira and
is working on an east coast port in India. Apart from 80mtpa Abbot Point Coal
Terminal in Australia, it is developing a 30-60mtpa coal terminal at Dudgeon Point
and may set-up 35-50mtpa port to evacuate coal from Tanjung Enim mines of
PTBA for ADE. Expect these capex to be lower RoCE v/s its core Mundra port.
Superior assets drive RoCE >WACC; But lower stock upside
We value MSEZ at Rs159 based on SOTP of project DCFs. New project
concessions wins and SEZ land bank scale up to 32k acres are catalysts. Risks:
Global weakness impacting port traffic & slow recovery in private capex at SEZs.
Price objective basis & risk
Mundra Port SEZ (XMANF)
Our PO of Rs159 for MSEZ is based on SOTP Valuation at CoE of 13.2-17.3%.
We have valued Mundra Port (Parent) business at Rs131 per share on DCF basis
at CoE of 13.2% for 50 years concession period. The SEZ business (Parent) is
valued at Rs14 per share based on DCF at CoE of 17.3% for 50 years
concession period. The stake of 74% in Dahej Port is valued at Rs10 per share
on DCF basis at CoE of 14.9%. The 100% stake in coal terminal concession at
Mormugao Port is valued at Rs2 per share on DCF basis at CoE of 14%. The
100% stake in subsidiary Adani Logistics Ltd, which operates Inland Container
Depots and Container Rails, is valued at Book value of Rs2 per share
respectively. The 20% stake in KRCL is valued at Book value of Rs0.2 per share.
Risks: Global recession impacting traffic at ports and slow private capex at SEZs
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Mundra Port & SEZ Ltd.
In-line Results; Growth pricedin
„Rec PAT +32% as coal & containers drive cargo +35%YoY
MSEZ 4QFY11 Rec. PAT Rs2.6bn +32%YoY was 6% below BofAMLe on higher
tax (15% v/s 7%) on start of coal terminal. Fall in port tariffs by 5%YoY led to port
income +28%YoY despite 35%YoY growth of cargo volume. We hike our FY12-
13E cargo assumption by 4-9% on start of SPM 2 but maintain PO on 25bps hike
in cost of equity to factor-in rising 10-year bond. Maintain Neutral despite a
compelling assets on initial lower return on acquisitions, with lower stock upside
potential v/s other developers in our coverage. We believe its EPS CAGR of 32%
over FY11-13E is reflected in its premium valuations at 23x FY12E EPS.
Coal 2x drive ASP down, fertilizer +84% & container +22%
Mundra Port saw 4Q cargo of 14.1mmT led by lower ASP coal +108%, while high
ASP container cargo grew at muted 22%YoY. 4QFY11 Rec. PAT grew +32%YoY
(-6% BofAMLe) on higher tax (15% v/s 7%) on start of coal terminal. However, 4Q
Reported PAT came-in at Rs3.3bn +74%YoY on Rs742mn (net of tax) of prior
period land lease income accounted on change in accounting policy & Rs41mn
derivative loss vs Rs222mn prior period income reversal and Rs144mn exchange
gain in 4Q10.
East port & APCT/Dudgeon Point +ves but to up capex/lower RoE
MSEZ is scaling-up its ports business – it has bagged ports at Goa & Hazira and
is working on an east coast port in India. Apart from 80mtpa Abbot Point Coal
Terminal in Australia, it is developing a 30-60mtpa coal terminal at Dudgeon Point
and may set-up 35-50mtpa port to evacuate coal from Tanjung Enim mines of
PTBA for ADE. Expect these capex to be lower RoCE v/s its core Mundra port.
Superior assets drive RoCE >WACC; But lower stock upside
We value MSEZ at Rs159 based on SOTP of project DCFs. New project
concessions wins and SEZ land bank scale up to 32k acres are catalysts. Risks:
Global weakness impacting port traffic & slow recovery in private capex at SEZs.
Price objective basis & risk
Mundra Port SEZ (XMANF)
Our PO of Rs159 for MSEZ is based on SOTP Valuation at CoE of 13.2-17.3%.
We have valued Mundra Port (Parent) business at Rs131 per share on DCF basis
at CoE of 13.2% for 50 years concession period. The SEZ business (Parent) is
valued at Rs14 per share based on DCF at CoE of 17.3% for 50 years
concession period. The stake of 74% in Dahej Port is valued at Rs10 per share
on DCF basis at CoE of 14.9%. The 100% stake in coal terminal concession at
Mormugao Port is valued at Rs2 per share on DCF basis at CoE of 14%. The
100% stake in subsidiary Adani Logistics Ltd, which operates Inland Container
Depots and Container Rails, is valued at Book value of Rs2 per share
respectively. The 20% stake in KRCL is valued at Book value of Rs0.2 per share.
Risks: Global recession impacting traffic at ports and slow private capex at SEZs
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