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LOGISTICS
Logistics - Port volumes at 12 major ports in Q3FY12
Performance of Logistics companies involved with container rail business,
CFS business and related business is strongly linked to performance of the
port sector in the country. With the total port volumes in Q3FY12 at the 12
major ports of the country estimated at 150 mn tonnes (+3% YoY) and
container volumes estimated at 1.95 mn TEUS ( +3% YOY) and minor ports
like Mundra estimated to grow much faster (14% YoY), we expect the
Logistics companies in our coverage to report healthy growth in Q3FY12
(except Concor).
Container Corporation of India (Accumulate: Target Price - Rs 950)
n Q3FY12 consolidated revenue is expected to increase ~ 7 % YoY and increase ~
5% QoQ to Rs 10400 mn, almost 2 x the growth in volumes at major ports. It is
important to note here that Concor primarily operates in Exim segment out of
JNPT.
n The domestic volumes of the company are estimated to report a YoY drop of
~5% in volumes. In the previous quarter Concor had reported a ~14% YoY
decline in domestic volumes primarily led by new railway policy effective Dec-
2010. Railways increased the specified rating of five commodities (cement, stone
other than marbles, iron & steel, alloys & metals, POL products) leading to higher
haulage by 100% to 275%. This led to Concor losing almost the entire volumes
of these commodities to road transportation. However the company has taken a
lot of steps to arrest the decline of volumes of these commodities.
n Operating profit is expected at Rs 2810 mn which translates into an operating
margin of ~27 %, declining almost 190 bps YoY from 28.90% primarily due to
increased competition in the Exim segment (waning pricing power) and higher
haulage cost in domestic segment (not completely passed to customers till date).
n With the company having a huge cash reserve of over Rs 23 bn which the company
has primarily invested in debt securities and with interest rates moving up,
we expect the other income of the company to be healthy in the current quarter
at Rs 750 mn versus Rs 479 mn in Q3FY11.
n Net profit for Q3FY12 is expected at Rs.2400 mn against Rs 1754 mn in Q2FY12
and Rs 2295 mn in Q3FY11.
Gateway Distriparks Ltd (Buy: TP - Rs 160)
n We expect GDL's Q3FY12 revenues to increase ~26% YoY and increase ~6%
QoQ to Rs 1952 mn. This we believe would be largely led by congestion at JNPT
and Chennai port (it leads to higher CFS volumes and realization) and improved
load factor in the rail business.
n The rail business is expected to report healthy load factor of 82% (previous year
78%) with operating margin of 17%. This would be fourth consecutive quarter
for the rail business to report profits at net level.
n With improved CFS realizations (YoY) and robust rail performance we expect
GDL to report operating profit of Rs 675 mn which translates into an improved
operating margin of ~35 %, improving almost 600 bps YoY from ~ 29%.
n Net profit is expected at Rs 345 mn versus Rs 335 mn in Q2FY12 and Rs 280 mn
in Q3FY11.
Allcargo Global Logistics (Buy: TP - Rs 195)
n Q3FY12 consolidated revenue is expected to increase ~ 17% YoY and increase
1% QoQ to Rs 8,200 mn, Again the congestion at JNPT and Chennai port would
help the company report better numbers in the CFS business. ECU line and domestic
MTO business is also estimated to report 4% growth in volumes in line
with growth of global container volumes. However the realization should be under
pressure due to uncertainty in Eurozone.
n Operating profit is expected at Rs 1050 mn which translates into an operating
margin of ~12.8 %, falling marginally QoQ from 12.9% primarily due to pricing
pressure in the key MTO business.
n Net profit is expected at Rs 600 mn against profit of Rs 609 mn in Q2FY12 and
profit of Rs 572 mn in Q3FY11.
Mundra Port and Special Economic Zone (MPSEZ) (Buy: Target
price - Rs 166)
n Q3FY12 revenue is expected to increase ~41 % YoY and increase ~ 6% QoQ to
Rs 6,600 mn. This would be primarily driven by volume surge in the coal, container
and POL. In December 2011 the company handled a record ~1.1 lakh
metric tonnes of coal in a day primarily imported by Adani Power and Tata
Power.
n The overall volumes at the port is expected to reach 18.5 mn tonnes in the current
quarter (Q2FY12 = 16.8 mn tonnes) with significant contribution from coal
and container. We expect the company to handle a total of ~73 mn in the current
financial year (FY11 = 52 mn tonnes).
n Operating profit is expected at Rs 4,356 mn which translates into an operating
margin of ~66 %. We expect the company to sustain operating margin in the
range of 66% to 68%. Quicker berthing of ships, faster turnaround time, mechanized
operations, ample storage facility and good hinterland connectivity enables
the company to command superior realisation in comparison to government ports
and even private counterparts.
n Net profit for Q3FY12 is expected at Rs.2915 mn against Rs 2734 mn in Q2FY12
and Rs 2286 mn in Q3FY11.
n Company has been continually bidding for port projects both on the east and the
west coast of the country. However the company is failing to obtain security
clearance for these projects from the home ministry. Recently it has emerged as
the highest bidder for Rs 1.06 bn dry bulk terminal at Kandla port.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
LOGISTICS
Logistics - Port volumes at 12 major ports in Q3FY12
Performance of Logistics companies involved with container rail business,
CFS business and related business is strongly linked to performance of the
port sector in the country. With the total port volumes in Q3FY12 at the 12
major ports of the country estimated at 150 mn tonnes (+3% YoY) and
container volumes estimated at 1.95 mn TEUS ( +3% YOY) and minor ports
like Mundra estimated to grow much faster (14% YoY), we expect the
Logistics companies in our coverage to report healthy growth in Q3FY12
(except Concor).
Container Corporation of India (Accumulate: Target Price - Rs 950)
n Q3FY12 consolidated revenue is expected to increase ~ 7 % YoY and increase ~
5% QoQ to Rs 10400 mn, almost 2 x the growth in volumes at major ports. It is
important to note here that Concor primarily operates in Exim segment out of
JNPT.
n The domestic volumes of the company are estimated to report a YoY drop of
~5% in volumes. In the previous quarter Concor had reported a ~14% YoY
decline in domestic volumes primarily led by new railway policy effective Dec-
2010. Railways increased the specified rating of five commodities (cement, stone
other than marbles, iron & steel, alloys & metals, POL products) leading to higher
haulage by 100% to 275%. This led to Concor losing almost the entire volumes
of these commodities to road transportation. However the company has taken a
lot of steps to arrest the decline of volumes of these commodities.
n Operating profit is expected at Rs 2810 mn which translates into an operating
margin of ~27 %, declining almost 190 bps YoY from 28.90% primarily due to
increased competition in the Exim segment (waning pricing power) and higher
haulage cost in domestic segment (not completely passed to customers till date).
n With the company having a huge cash reserve of over Rs 23 bn which the company
has primarily invested in debt securities and with interest rates moving up,
we expect the other income of the company to be healthy in the current quarter
at Rs 750 mn versus Rs 479 mn in Q3FY11.
n Net profit for Q3FY12 is expected at Rs.2400 mn against Rs 1754 mn in Q2FY12
and Rs 2295 mn in Q3FY11.
Gateway Distriparks Ltd (Buy: TP - Rs 160)
n We expect GDL's Q3FY12 revenues to increase ~26% YoY and increase ~6%
QoQ to Rs 1952 mn. This we believe would be largely led by congestion at JNPT
and Chennai port (it leads to higher CFS volumes and realization) and improved
load factor in the rail business.
n The rail business is expected to report healthy load factor of 82% (previous year
78%) with operating margin of 17%. This would be fourth consecutive quarter
for the rail business to report profits at net level.
n With improved CFS realizations (YoY) and robust rail performance we expect
GDL to report operating profit of Rs 675 mn which translates into an improved
operating margin of ~35 %, improving almost 600 bps YoY from ~ 29%.
n Net profit is expected at Rs 345 mn versus Rs 335 mn in Q2FY12 and Rs 280 mn
in Q3FY11.
Allcargo Global Logistics (Buy: TP - Rs 195)
n Q3FY12 consolidated revenue is expected to increase ~ 17% YoY and increase
1% QoQ to Rs 8,200 mn, Again the congestion at JNPT and Chennai port would
help the company report better numbers in the CFS business. ECU line and domestic
MTO business is also estimated to report 4% growth in volumes in line
with growth of global container volumes. However the realization should be under
pressure due to uncertainty in Eurozone.
n Operating profit is expected at Rs 1050 mn which translates into an operating
margin of ~12.8 %, falling marginally QoQ from 12.9% primarily due to pricing
pressure in the key MTO business.
n Net profit is expected at Rs 600 mn against profit of Rs 609 mn in Q2FY12 and
profit of Rs 572 mn in Q3FY11.
Mundra Port and Special Economic Zone (MPSEZ) (Buy: Target
price - Rs 166)
n Q3FY12 revenue is expected to increase ~41 % YoY and increase ~ 6% QoQ to
Rs 6,600 mn. This would be primarily driven by volume surge in the coal, container
and POL. In December 2011 the company handled a record ~1.1 lakh
metric tonnes of coal in a day primarily imported by Adani Power and Tata
Power.
n The overall volumes at the port is expected to reach 18.5 mn tonnes in the current
quarter (Q2FY12 = 16.8 mn tonnes) with significant contribution from coal
and container. We expect the company to handle a total of ~73 mn in the current
financial year (FY11 = 52 mn tonnes).
n Operating profit is expected at Rs 4,356 mn which translates into an operating
margin of ~66 %. We expect the company to sustain operating margin in the
range of 66% to 68%. Quicker berthing of ships, faster turnaround time, mechanized
operations, ample storage facility and good hinterland connectivity enables
the company to command superior realisation in comparison to government ports
and even private counterparts.
n Net profit for Q3FY12 is expected at Rs.2915 mn against Rs 2734 mn in Q2FY12
and Rs 2286 mn in Q3FY11.
n Company has been continually bidding for port projects both on the east and the
west coast of the country. However the company is failing to obtain security
clearance for these projects from the home ministry. Recently it has emerged as
the highest bidder for Rs 1.06 bn dry bulk terminal at Kandla port.
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