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Petronet LNG (PLNG.BO)
1Q: Another Strong Qtr; Capacity Expansions a Big Thumbs Up
Strong broad-based performance — PLNG reported a fourth straight qtr of strong
results (PAT of Rs2.57bn, up 130% yoy, 24% qoq), significantly ahead of our and
consensus estimates, driven by a combination of: (i) qoq jump in overall regas vols
(2.62 MMT vs. 2.47 in 4Q, now running at ~105% capacity util.), (ii) higher proportion of
spot vols (additional mktg margins earned), (iii) likely expansion in mktg margins (better
pricing power due to domestic gas shortfall), and (iv) some efficiency gains.
Announces Dahej capacity expansion; exploring new terminal at east coast —
Mgmt announced that they plan to increase nameplate capacity at Dahej by 5 MMTPA
(10 currently) for capex of cUS$500m given the strong demand outlook. Including the
second jetty (currently under construction), this will take effective regas capacity at
Dahej to c17-18 MMTPA in c3-3½ yrs. In addition, the board has granted approval for
conducting a feasibility study for a greenfield terminal on the east coast (c5 MMTPA).
Superior earnings visibility; upgrading estimates further — With ~9 MMTPA of vols
already tied up for FY12-13E (82-86% of our vol assumptions), driven by strong
demand from the industrial segment (esp. refiners), earnings visibility for PLNG
remains extremely strong for the next two years. While significant volume-led surprises
may be unlikely in the near term (limited by constraints on the marine front; in addition,
weather, shipment delays, etc., could induce volatility), we raise our FY12-13E EBITDA
by 10-16% (EPS by 18-19%) as our mktg margin assumptions go up (will continue to
remain a sellers’ mkt till domestic gas ramps up). Upgrades to consensus earnings are
also likely to follow. Our TP now stands at Rs178. The stock trades at FY12E P/E of
12.7x and EV/EBITDA of 8.7x, reasonable given 3-yr EBITDA CAGR of 21%.
Expansion plan upholds sector view; vindicates pipeline expansions — The
announced expansion plans not only uphold our +ve long-term thesis on the gas sector
in general and LNG in particular (we estimate the latter will drive ~50% of India’s gas
supply growth, which we foresee doubling in 5 years) but also vindicate the expansion
plans of companies like GSPL, which is our top long-term pick in the space
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Petronet LNG (PLNG.BO)
1Q: Another Strong Qtr; Capacity Expansions a Big Thumbs Up
Strong broad-based performance — PLNG reported a fourth straight qtr of strong
results (PAT of Rs2.57bn, up 130% yoy, 24% qoq), significantly ahead of our and
consensus estimates, driven by a combination of: (i) qoq jump in overall regas vols
(2.62 MMT vs. 2.47 in 4Q, now running at ~105% capacity util.), (ii) higher proportion of
spot vols (additional mktg margins earned), (iii) likely expansion in mktg margins (better
pricing power due to domestic gas shortfall), and (iv) some efficiency gains.
Announces Dahej capacity expansion; exploring new terminal at east coast —
Mgmt announced that they plan to increase nameplate capacity at Dahej by 5 MMTPA
(10 currently) for capex of cUS$500m given the strong demand outlook. Including the
second jetty (currently under construction), this will take effective regas capacity at
Dahej to c17-18 MMTPA in c3-3½ yrs. In addition, the board has granted approval for
conducting a feasibility study for a greenfield terminal on the east coast (c5 MMTPA).
Superior earnings visibility; upgrading estimates further — With ~9 MMTPA of vols
already tied up for FY12-13E (82-86% of our vol assumptions), driven by strong
demand from the industrial segment (esp. refiners), earnings visibility for PLNG
remains extremely strong for the next two years. While significant volume-led surprises
may be unlikely in the near term (limited by constraints on the marine front; in addition,
weather, shipment delays, etc., could induce volatility), we raise our FY12-13E EBITDA
by 10-16% (EPS by 18-19%) as our mktg margin assumptions go up (will continue to
remain a sellers’ mkt till domestic gas ramps up). Upgrades to consensus earnings are
also likely to follow. Our TP now stands at Rs178. The stock trades at FY12E P/E of
12.7x and EV/EBITDA of 8.7x, reasonable given 3-yr EBITDA CAGR of 21%.
Expansion plan upholds sector view; vindicates pipeline expansions — The
announced expansion plans not only uphold our +ve long-term thesis on the gas sector
in general and LNG in particular (we estimate the latter will drive ~50% of India’s gas
supply growth, which we foresee doubling in 5 years) but also vindicate the expansion
plans of companies like GSPL, which is our top long-term pick in the space
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