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Mundra Port & SEZ Ltd.
Inline 1Q; Port Good; SEZ Weak
Rec PAT +19%YoY as coal & containers drive cargo +19%YoY
MSEZ’s 1QFY12 Rec. PAT of Rs2.6bn +19%YoY (in line with BofAMLe) on port
income +26%YoY - +6%YoY in port tariffs and volume +19%YoY. ASP rose on
high-margin cargo growth – Fertilizer +65%YoY, container 23% and a fall in low-
ASP liquids. Start-up expenses of the new coal terminal caused the EBITDA
margin to fall 114bps. We maintain our Neutral rating ,despite a compelling asset,
on the initial lower return on the Australian acquisition, leveraged consol. balance
sheet post acquisition (net D/E 2.4x) and lower stock upside vs. other developers
in our coverage. Its EPS CAGR of 32% over FY11-13E is well reflected in its
premium valuation, at 24x FY12E EPS.
Fertilizer +65%, Coal +43% & container +23%
Mundra Port saw 1Q cargo of 15.1mmT, led by lower ASP coal +43%YoY (63% of
incremental cargo), while high-ASP container cargo grew at muted 23%YoY (31%
of incremental cargo). SEZ revenue was minuscule at Rs60mn @ Rs10mn/acre.
MSEZ provided for MAT, but claimed almost equal (Rs528mn) credit to off-set tax
burden. 1QFY12 Rec. PAT Rs2.6bn +19%YoY (in line with BofAMLe), on 6%YoY
growth in port tariffs @ Rs338/tn and +19%YoY cargo volume led port income
+26%YoY. Treasury income fell 72%YoY on lower liquidity. However, Rep. PAT
came in at Rs2.5bn +20%YoY, on a Rs18mn derivative loss vs. Rs46mn in 1Q11.
East port & APCT/Dudgeon Point +ves but to up capex/lower RoE
MSEZ is scaling up its ports business – it has bagged ports at Goa and Hazira,
and is working on an east coast port in India. Apart from the 80mtpa Abbot Point
Coal Terminal in Australia, it is developing a 30-60mtpa coal terminal at Dudgeon
Point and may set up a 35-50mtpa port to evacuate coal from the Tanjung Enim
mines of PTBA for ADE. We expect these capex to be lower RoCE vs. its core
Mundra port. We value MSEZ at Rs159, based on a SOTP of project DCFs. New
project concession wins and SEZ’s land bank scale up to 32k acres are catalysts.
Risks: Global weakness impacting port traffic and a slow recovery in private capex
at SEZs
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Mundra Port & SEZ Ltd.
Inline 1Q; Port Good; SEZ Weak
Rec PAT +19%YoY as coal & containers drive cargo +19%YoY
MSEZ’s 1QFY12 Rec. PAT of Rs2.6bn +19%YoY (in line with BofAMLe) on port
income +26%YoY - +6%YoY in port tariffs and volume +19%YoY. ASP rose on
high-margin cargo growth – Fertilizer +65%YoY, container 23% and a fall in low-
ASP liquids. Start-up expenses of the new coal terminal caused the EBITDA
margin to fall 114bps. We maintain our Neutral rating ,despite a compelling asset,
on the initial lower return on the Australian acquisition, leveraged consol. balance
sheet post acquisition (net D/E 2.4x) and lower stock upside vs. other developers
in our coverage. Its EPS CAGR of 32% over FY11-13E is well reflected in its
premium valuation, at 24x FY12E EPS.
Fertilizer +65%, Coal +43% & container +23%
Mundra Port saw 1Q cargo of 15.1mmT, led by lower ASP coal +43%YoY (63% of
incremental cargo), while high-ASP container cargo grew at muted 23%YoY (31%
of incremental cargo). SEZ revenue was minuscule at Rs60mn @ Rs10mn/acre.
MSEZ provided for MAT, but claimed almost equal (Rs528mn) credit to off-set tax
burden. 1QFY12 Rec. PAT Rs2.6bn +19%YoY (in line with BofAMLe), on 6%YoY
growth in port tariffs @ Rs338/tn and +19%YoY cargo volume led port income
+26%YoY. Treasury income fell 72%YoY on lower liquidity. However, Rep. PAT
came in at Rs2.5bn +20%YoY, on a Rs18mn derivative loss vs. Rs46mn in 1Q11.
East port & APCT/Dudgeon Point +ves but to up capex/lower RoE
MSEZ is scaling up its ports business – it has bagged ports at Goa and Hazira,
and is working on an east coast port in India. Apart from the 80mtpa Abbot Point
Coal Terminal in Australia, it is developing a 30-60mtpa coal terminal at Dudgeon
Point and may set up a 35-50mtpa port to evacuate coal from the Tanjung Enim
mines of PTBA for ADE. We expect these capex to be lower RoCE vs. its core
Mundra port. We value MSEZ at Rs159, based on a SOTP of project DCFs. New
project concession wins and SEZ’s land bank scale up to 32k acres are catalysts.
Risks: Global weakness impacting port traffic and a slow recovery in private capex
at SEZs
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