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Margins under pressure despite healthy realisations
Allcargo Logistics’ (Allcargo) Q4 results were below our estimates. Though
revenue was higher on the back of higher realisations in CFS and volumes in MTO
business, margins were lower than expectations mainly led by both standalone
MTO and ECU Line. Allcargo had reported its highest ever operating margins at
12.9% during Q3. Overall volumes remained steady (up 8.6% YoY but flat QoQ) at
131,793 containers. We remain upbeat on Allcargo due to strong container
volumes and improvement in margins led by CFS and ECU Line.
Q3 results mixed: Consolidated revenue grew 41.9% YoY to Rs9,983mn, 22.1%
above expectations. Operating profit at Rs993mn up 29.0% YoY was 1.3% below
estimates. EBITDA margins at 10.0% declined 100bp YoY, 236bp lower than
estimates. Adjusted net profit at Rs506mn was 11.8% below our estimate while net
margin at 5.1% was 195bp lower.
MTO business helped by steady volumes: Domestic MTO revenue increased
14.0% YoY mainly on the back of healthy volumes. While average realisations
fell 2.5% YoY to Rs86,350 per container, volumes grew 17.0% YoY to 7,124
containers. ECU Line’s Q4 revenue improved 33.8% YoY to Rs6,868mn on the
back of both healthy volumes and realisations. While volumes were up 14.5%
YoY to 61,379 containers, realisations increased 16.9% YoY to Rs111,895 per
container.
ECU Line continues to outperform: ECU Line reported a revenue growth of
33.8% YoY to Rs6,868mn while EBITDA increased 25.4% YoY to Rs380mn. Net
profit after minority interest grew 22.1% YoY to Rs210mn. However,
profitability margins were under pressure with OPM down 37bp YoY to 5.5%
and NPM lower by 29bp YoY to 3.1%.
Volumes flat but realisations remain high in CFS operations: CFS revenue
grew 27.0% YoY mainly on the back of healthy realisations. Overall CFS
realisations improved 21.5% YoY at Rs12,311 per container backed by higher
dwell time and increased tariff (during Q1-Q2CY11). Volumes at JNPT CFS
remained lacklustre declining 15.0% YoY to 28,364 TEUs. Chennai CFS
recorded its highest ever volumes at 24,648 containers (up 17.6% YoY).
Maintain Buy with a revised target price of Rs220: At the CMP, the stock
trades at 7.0x and 6.3x CY12E and CY13E earnings respectively and appears
attractive. While we have marginally revised our estimates, we roll forward our
target price to CY13. We value the stock at 10x CY13E earnings, giving a
revised target price of Rs220 (earlier: Rs242). While its last 4 years average 1-
year forward P/E is 15x, the multiple has come down in last 2 years to 10x
mainly due to the global economic slowdown
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Margins under pressure despite healthy realisations
Allcargo Logistics’ (Allcargo) Q4 results were below our estimates. Though
revenue was higher on the back of higher realisations in CFS and volumes in MTO
business, margins were lower than expectations mainly led by both standalone
MTO and ECU Line. Allcargo had reported its highest ever operating margins at
12.9% during Q3. Overall volumes remained steady (up 8.6% YoY but flat QoQ) at
131,793 containers. We remain upbeat on Allcargo due to strong container
volumes and improvement in margins led by CFS and ECU Line.
Q3 results mixed: Consolidated revenue grew 41.9% YoY to Rs9,983mn, 22.1%
above expectations. Operating profit at Rs993mn up 29.0% YoY was 1.3% below
estimates. EBITDA margins at 10.0% declined 100bp YoY, 236bp lower than
estimates. Adjusted net profit at Rs506mn was 11.8% below our estimate while net
margin at 5.1% was 195bp lower.
MTO business helped by steady volumes: Domestic MTO revenue increased
14.0% YoY mainly on the back of healthy volumes. While average realisations
fell 2.5% YoY to Rs86,350 per container, volumes grew 17.0% YoY to 7,124
containers. ECU Line’s Q4 revenue improved 33.8% YoY to Rs6,868mn on the
back of both healthy volumes and realisations. While volumes were up 14.5%
YoY to 61,379 containers, realisations increased 16.9% YoY to Rs111,895 per
container.
ECU Line continues to outperform: ECU Line reported a revenue growth of
33.8% YoY to Rs6,868mn while EBITDA increased 25.4% YoY to Rs380mn. Net
profit after minority interest grew 22.1% YoY to Rs210mn. However,
profitability margins were under pressure with OPM down 37bp YoY to 5.5%
and NPM lower by 29bp YoY to 3.1%.
Volumes flat but realisations remain high in CFS operations: CFS revenue
grew 27.0% YoY mainly on the back of healthy realisations. Overall CFS
realisations improved 21.5% YoY at Rs12,311 per container backed by higher
dwell time and increased tariff (during Q1-Q2CY11). Volumes at JNPT CFS
remained lacklustre declining 15.0% YoY to 28,364 TEUs. Chennai CFS
recorded its highest ever volumes at 24,648 containers (up 17.6% YoY).
Maintain Buy with a revised target price of Rs220: At the CMP, the stock
trades at 7.0x and 6.3x CY12E and CY13E earnings respectively and appears
attractive. While we have marginally revised our estimates, we roll forward our
target price to CY13. We value the stock at 10x CY13E earnings, giving a
revised target price of Rs220 (earlier: Rs242). While its last 4 years average 1-
year forward P/E is 15x, the multiple has come down in last 2 years to 10x
mainly due to the global economic slowdown
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