Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
SHIPPING
q The dry bulk market is persistently facing problem of oversupply of ships
pegged at 10 to 12% per annum (Gross supply of 196 mn tonnes (December
2011) in the next 3 to 4 years) and that is putting the various Baltic
Indices and freight rates under pressure. However the month of October
and November 2011 saw the Baltic Index remaining flat. The cape Index
gained almost 10% QoQ. This was because of increased imports by
China of iron ore and coal in the months of November and December.Lot
of activity was reported in the spot cargo for larger ships in November
which led to freights increasing by 15 to 30% on different cape routes.
Little activity was seen in the Panamax, Supramax and the Handymax
segments, not enough to boost sentiment and freight levels in the quarter.
The orderbook to fleet ratio currently stands at 34% - down from 37
% in Q2FY12 and 52% in December 2010 which is positive for the sector.
q The oversupply of vessel is a serious concern even in the crude tanker
market. However activity in the current quarter increased tremendously
due to winter in the west which helped the tanker segment do well in
Q3FY12. Both the Baltic clean tanker index and Baltic dirty tanker index
surged by ~40% in the quarter which would help ships in the spot market.
It is important to note that Q3FY12 is usually good for the tanker
segment.
q Sluggish world economy, slowing consumer demand, debt crisis in Europe
and burgeoning order book is putting pressure on the container
market was weak. The market was weak in Q3FY12 and down 20% QoQ
and is estimated to remain flat in near term.
q Second hand shipping asset prices have slipped by 5 to 25 % across segments
(especially tanker segment) impacting the NAV and replacement
cost of most of the companies.
q Higher bunker cost is also having a negative impact on the companies.
Shipping Corporation of India (Reduce: Target Price - Rs 60)
n We expect SCI's Q3FY12 revenues to increase 3.5% YoY and increase 1.5%
QoQ to Rs 9,200 mn, led by strong tanker market. The impact of the strong
tanker market won't be significant for the company as the company has more
than 65% of the ships on long term charters.
n Operating profit is expected to fall considerably to Rs 610 mn which translates
into an operating margin of ~7 %, falling almost 1100 bps YoY from ~18% primarily
due to higher bunker cost and subdued freight market.
n Net profit is expected at Rs 350 mn against loss of Rs 1408 mn in Q2FY12 and
profit of Rs 1,230 mn in Q3FY11. The YoY fall would be primarily due to poor
freight market, lower gains from sale of ships and higher interest impact this
quarter vs. last year.
n As asset prices have corrected QoQ, we also estimate the gross NAV of the company
to have corrected from Rs 120 in September quarter to around Rs 90 in the
current quarter.
Great Eastern Shipping Co (Accumulate: Target Price -Rs 315)
n Q3FY12 consolidated revenue is expected to increase ~24 % YoY and remain
flattish QoQ to Rs 6,900 mn, primarily due to strong tanker market. Even the
offshore segment is expected to do well in the quarter with Brent crude sustaining
above $100 per barrel in the quarter.
n Operating profit is expected at Rs 2750 mn which translates into an operating
margin of ~40 %. Despite high bunker and insurance cost we expect the company
to report healthy operating profit as the company has almost 50% of its
tanker fleet in spot market. We also expect the offshore segment to do well in
the quarter.
n Net profit is expected at Rs 690 mn against negligible profit of Rs 275 mn in
Q2FY12 and profit of Rs 1,174 mn in Q3FY11. The YoY fall would be primarily
due to lower gains from sale of ships, high bunker cost and overall weak shipping
freight rates YoY.
n The company currently has a fleet of 34 ships aggregating 2.62 mn dwt. In FY12
till date, the company took delivery of 2 Kasramax (each of 81,000 dwt) and a
Supramax of 57,000 dwt. The company also sold three tankers having capacity
of 46,000 dwt (1995 built), 29,000 dwt (1982 built) and 152,000 dwt (1989
built). This was primarily due to poor market conditions and poor shipping market
outlook. If we observe the trend for the last 3 years - the company has been
net seller of ships in the market. Under current circumstance where the shipping
market is estimated to remain weak atleast for the next two years, we expect
GESCO to resist from adding ships to its fleet - which is a prudent measure as
many ships currently are burning cash. We expect GESCO to focus more on the
offshore subsidiary.
n Net NAV at end of current quarter is estimated at Rs 320 which includes investment
of Rs 16 bn by the parent in the offshore subsidiary (GIL).
n With poor market conditions, GESCO has deferred the plans of the IPO of GIL
which we had anticipated to come by 2HFY12E. We now expect the IPO to
come in FY14E when GIL achieves some scale in revenues and profits.
Mercator Lines Ltd (Buy: Target Price - Rs 38)
n Q3FY12 consolidated revenue is expected to increase ~ 4 % YoY and increase ~
3% QoQ to Rs 8050 mn with significant contribution from the coal segment
(~62%).
n The offshore segment is expected to do well in the quarter with Brent crude sustaining
above $100 per barrel in the quarter. However the shipping segment with
heavy exposure to dry bulk segment is expected to report subdued numbers. The
coal segment (Oorja holdings) is expected to report revenue of Rs 4800 mn
(+10% QoQ; +14% YoY).
n Operating profit is expected at Rs 1200 mn which translates into an operating
margin of ~15%, declining almost 250 bps YoY from 17.5% primarily due to
higher bunker cost, weak dry bulk market and increasing share of low Ebidta
margin coal business.
n Net profit for Q3FY12 is expected at Rs 85 mn against Rs 67 mn in Q2FY12 and
Rs 16 mn in Q3FY11. We don't expect any significant non-recurring items in the
current quarter
n The latest net NAV that we had estimated in the month of December 2011 for
the company is Rs 30/ share.
n MLL is looking forward to get the 100% mining subsidiary listed (Oorja holding
ltd) which would lead to significant value unlocking for the parent company (an
upside of ~5 to 10% from the current levels). However, due to poor market conditions,
the listing of Oorja holding may get deferred to the next financial year
(FY13E) which can be a dampener for the company which is already struggling
with weak shipping business.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
SHIPPING
q The dry bulk market is persistently facing problem of oversupply of ships
pegged at 10 to 12% per annum (Gross supply of 196 mn tonnes (December
2011) in the next 3 to 4 years) and that is putting the various Baltic
Indices and freight rates under pressure. However the month of October
and November 2011 saw the Baltic Index remaining flat. The cape Index
gained almost 10% QoQ. This was because of increased imports by
China of iron ore and coal in the months of November and December.Lot
of activity was reported in the spot cargo for larger ships in November
which led to freights increasing by 15 to 30% on different cape routes.
Little activity was seen in the Panamax, Supramax and the Handymax
segments, not enough to boost sentiment and freight levels in the quarter.
The orderbook to fleet ratio currently stands at 34% - down from 37
% in Q2FY12 and 52% in December 2010 which is positive for the sector.
q The oversupply of vessel is a serious concern even in the crude tanker
market. However activity in the current quarter increased tremendously
due to winter in the west which helped the tanker segment do well in
Q3FY12. Both the Baltic clean tanker index and Baltic dirty tanker index
surged by ~40% in the quarter which would help ships in the spot market.
It is important to note that Q3FY12 is usually good for the tanker
segment.
q Sluggish world economy, slowing consumer demand, debt crisis in Europe
and burgeoning order book is putting pressure on the container
market was weak. The market was weak in Q3FY12 and down 20% QoQ
and is estimated to remain flat in near term.
q Second hand shipping asset prices have slipped by 5 to 25 % across segments
(especially tanker segment) impacting the NAV and replacement
cost of most of the companies.
q Higher bunker cost is also having a negative impact on the companies.
Shipping Corporation of India (Reduce: Target Price - Rs 60)
n We expect SCI's Q3FY12 revenues to increase 3.5% YoY and increase 1.5%
QoQ to Rs 9,200 mn, led by strong tanker market. The impact of the strong
tanker market won't be significant for the company as the company has more
than 65% of the ships on long term charters.
n Operating profit is expected to fall considerably to Rs 610 mn which translates
into an operating margin of ~7 %, falling almost 1100 bps YoY from ~18% primarily
due to higher bunker cost and subdued freight market.
n Net profit is expected at Rs 350 mn against loss of Rs 1408 mn in Q2FY12 and
profit of Rs 1,230 mn in Q3FY11. The YoY fall would be primarily due to poor
freight market, lower gains from sale of ships and higher interest impact this
quarter vs. last year.
n As asset prices have corrected QoQ, we also estimate the gross NAV of the company
to have corrected from Rs 120 in September quarter to around Rs 90 in the
current quarter.
Great Eastern Shipping Co (Accumulate: Target Price -Rs 315)
n Q3FY12 consolidated revenue is expected to increase ~24 % YoY and remain
flattish QoQ to Rs 6,900 mn, primarily due to strong tanker market. Even the
offshore segment is expected to do well in the quarter with Brent crude sustaining
above $100 per barrel in the quarter.
n Operating profit is expected at Rs 2750 mn which translates into an operating
margin of ~40 %. Despite high bunker and insurance cost we expect the company
to report healthy operating profit as the company has almost 50% of its
tanker fleet in spot market. We also expect the offshore segment to do well in
the quarter.
n Net profit is expected at Rs 690 mn against negligible profit of Rs 275 mn in
Q2FY12 and profit of Rs 1,174 mn in Q3FY11. The YoY fall would be primarily
due to lower gains from sale of ships, high bunker cost and overall weak shipping
freight rates YoY.
n The company currently has a fleet of 34 ships aggregating 2.62 mn dwt. In FY12
till date, the company took delivery of 2 Kasramax (each of 81,000 dwt) and a
Supramax of 57,000 dwt. The company also sold three tankers having capacity
of 46,000 dwt (1995 built), 29,000 dwt (1982 built) and 152,000 dwt (1989
built). This was primarily due to poor market conditions and poor shipping market
outlook. If we observe the trend for the last 3 years - the company has been
net seller of ships in the market. Under current circumstance where the shipping
market is estimated to remain weak atleast for the next two years, we expect
GESCO to resist from adding ships to its fleet - which is a prudent measure as
many ships currently are burning cash. We expect GESCO to focus more on the
offshore subsidiary.
n Net NAV at end of current quarter is estimated at Rs 320 which includes investment
of Rs 16 bn by the parent in the offshore subsidiary (GIL).
n With poor market conditions, GESCO has deferred the plans of the IPO of GIL
which we had anticipated to come by 2HFY12E. We now expect the IPO to
come in FY14E when GIL achieves some scale in revenues and profits.
Mercator Lines Ltd (Buy: Target Price - Rs 38)
n Q3FY12 consolidated revenue is expected to increase ~ 4 % YoY and increase ~
3% QoQ to Rs 8050 mn with significant contribution from the coal segment
(~62%).
n The offshore segment is expected to do well in the quarter with Brent crude sustaining
above $100 per barrel in the quarter. However the shipping segment with
heavy exposure to dry bulk segment is expected to report subdued numbers. The
coal segment (Oorja holdings) is expected to report revenue of Rs 4800 mn
(+10% QoQ; +14% YoY).
n Operating profit is expected at Rs 1200 mn which translates into an operating
margin of ~15%, declining almost 250 bps YoY from 17.5% primarily due to
higher bunker cost, weak dry bulk market and increasing share of low Ebidta
margin coal business.
n Net profit for Q3FY12 is expected at Rs 85 mn against Rs 67 mn in Q2FY12 and
Rs 16 mn in Q3FY11. We don't expect any significant non-recurring items in the
current quarter
n The latest net NAV that we had estimated in the month of December 2011 for
the company is Rs 30/ share.
n MLL is looking forward to get the 100% mining subsidiary listed (Oorja holding
ltd) which would lead to significant value unlocking for the parent company (an
upside of ~5 to 10% from the current levels). However, due to poor market conditions,
the listing of Oorja holding may get deferred to the next financial year
(FY13E) which can be a dampener for the company which is already struggling
with weak shipping business.
No comments:
Post a Comment