Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
2QFY12 PAT of Rs2.6bn was 13% ahead of our estimates primarily due to better volume mix
even though overall volumes were only marginally ahead. PLNG management is not seeing any
slowdown in LNG demand despite high spot prices. We maintain our Buy rating and TP of Rs190.
2QFY12 PAT 13% ahead of our expectations
Petronet LNG (PLNG) reported 2QFY12 PAT of Rs2.6bn (+99% yoy, 1% qoq) which was
13% ahead of our estimates primarily due to better than expected volume mix even though
overall volumes (135.1tbtus) were only marginally ahead of our estimates (133.2tbtus).
2QFY12 spot volumes (27.7tbtus) on which the company earns marketing margins
constituted 21% of overall volumes compared to our estimate of 14% (18.9tbtus). Our back of
envelope calculations indicate that PLNG earned marketing margin of US$0.80/mmbtu in line
with our expectations. Consequently absolute marketing margins were ahead of our
expectations.
Overall volumes were split between Ras gas volumes of 90.15 tbtus (-5% yoy) and short tem
(including pure regas) of 44.9tbtus. While the Ras gas contract is for 7.5mtpa, the 1HFY12
run rate has been of 7.2mtpa indicating that 2H run rate could be higher than 7.5mtpa which
could reduce the scope for spot volumes. That said we do not rule out further improvement in
capacity utilisation as seen in June 2011 when Petronet operated at the annual run rate of
11.5mtpa driven by operational efficiencies.
Management remains bullish on LNG demand
Notwithstanding the market fears of demand slowdown due to high spot LNG prices, PLNG
management remains extremely positive on the prospects of LNG in the country in the short
term. As per the company even at the prevailing spot prices, LNG remains competitive
compared to alternative liquid fuels and is not seeing any slowdown in LNG demand. Even
though there is marginal contraction in demand from refineries, it sees strong demand coming
from industrial users like petrochemicals & steel plants and city gas distribution.
As per the company, after hitting a peak of US$18/mmbtu, the spot LNG prices have receded
a bit and expects further softening in LNG prices post January/February 2012 as the peak
winter season demand from Japan eases.
The company expects to sustain the current volume run rate of 10.5 mtpa throughout FY12
and expects 3QFY12 volumes to be at par with 2Q.
Capacity expansion plans on track
The company mentioned that the Kochi terminal has already achieved 90% completion and is
on track to operationalise in August/September 2012 at the project cost of Rs42bn. Further
management has guided for Kochi volumes of 1.5-2mtpa in FY14 and rising to 5mtpa in 2-3
years. While the regas tariff for Kochi hasn’t been finalised yet, the company guided that it
would be benchmarked to achieve project equity IRR of 16%.
The 2.5mtpa Jetty at the Dahej terminal is also largely on track and slated to complete in
4QCY13 at project cost of Rs9bn.
Controversy on the Ras Gas deal
While management refrained from commenting on the recent controversy on the long term
Ras Gas contract, it did mention that in its view the deal terms continue to be attractive in the
current environment.
We maintain our Buy rating and TP of Rs190
1HFY12 has achieved 50%/52% of our FY12 volume/ PAT estimates and given our
expectation of another 5% hike in regas tariffs in January 2012, the company could slightly
exceed our full year EPS estimate of Rs13.3.
At the current price the stock trade at 11.3x FY13 EPS in line with other power/gas utilities.
With timely capacity expansions, we believe Petronet is well placed to ride the continued strength in LNG demand environment. We maintain our Buy rating and target price of Rs190.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
2QFY12 PAT of Rs2.6bn was 13% ahead of our estimates primarily due to better volume mix
even though overall volumes were only marginally ahead. PLNG management is not seeing any
slowdown in LNG demand despite high spot prices. We maintain our Buy rating and TP of Rs190.
2QFY12 PAT 13% ahead of our expectations
Petronet LNG (PLNG) reported 2QFY12 PAT of Rs2.6bn (+99% yoy, 1% qoq) which was
13% ahead of our estimates primarily due to better than expected volume mix even though
overall volumes (135.1tbtus) were only marginally ahead of our estimates (133.2tbtus).
2QFY12 spot volumes (27.7tbtus) on which the company earns marketing margins
constituted 21% of overall volumes compared to our estimate of 14% (18.9tbtus). Our back of
envelope calculations indicate that PLNG earned marketing margin of US$0.80/mmbtu in line
with our expectations. Consequently absolute marketing margins were ahead of our
expectations.
Overall volumes were split between Ras gas volumes of 90.15 tbtus (-5% yoy) and short tem
(including pure regas) of 44.9tbtus. While the Ras gas contract is for 7.5mtpa, the 1HFY12
run rate has been of 7.2mtpa indicating that 2H run rate could be higher than 7.5mtpa which
could reduce the scope for spot volumes. That said we do not rule out further improvement in
capacity utilisation as seen in June 2011 when Petronet operated at the annual run rate of
11.5mtpa driven by operational efficiencies.
Management remains bullish on LNG demand
Notwithstanding the market fears of demand slowdown due to high spot LNG prices, PLNG
management remains extremely positive on the prospects of LNG in the country in the short
term. As per the company even at the prevailing spot prices, LNG remains competitive
compared to alternative liquid fuels and is not seeing any slowdown in LNG demand. Even
though there is marginal contraction in demand from refineries, it sees strong demand coming
from industrial users like petrochemicals & steel plants and city gas distribution.
As per the company, after hitting a peak of US$18/mmbtu, the spot LNG prices have receded
a bit and expects further softening in LNG prices post January/February 2012 as the peak
winter season demand from Japan eases.
The company expects to sustain the current volume run rate of 10.5 mtpa throughout FY12
and expects 3QFY12 volumes to be at par with 2Q.
Capacity expansion plans on track
The company mentioned that the Kochi terminal has already achieved 90% completion and is
on track to operationalise in August/September 2012 at the project cost of Rs42bn. Further
management has guided for Kochi volumes of 1.5-2mtpa in FY14 and rising to 5mtpa in 2-3
years. While the regas tariff for Kochi hasn’t been finalised yet, the company guided that it
would be benchmarked to achieve project equity IRR of 16%.
The 2.5mtpa Jetty at the Dahej terminal is also largely on track and slated to complete in
4QCY13 at project cost of Rs9bn.
Controversy on the Ras Gas deal
While management refrained from commenting on the recent controversy on the long term
Ras Gas contract, it did mention that in its view the deal terms continue to be attractive in the
current environment.
We maintain our Buy rating and TP of Rs190
1HFY12 has achieved 50%/52% of our FY12 volume/ PAT estimates and given our
expectation of another 5% hike in regas tariffs in January 2012, the company could slightly
exceed our full year EPS estimate of Rs13.3.
At the current price the stock trade at 11.3x FY13 EPS in line with other power/gas utilities.
With timely capacity expansions, we believe Petronet is well placed to ride the continued strength in LNG demand environment. We maintain our Buy rating and target price of Rs190.
No comments:
Post a Comment