Aegis Logistics Q4FY17 Concall Summary

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Financial Highlights

Aegis Q4FY17 Financials
  • The revenues for 2016-'17 financial year was Rs. 3,938 Crores versus Rs. 2,213 Crores year earlier, rise of 78% yoy. 
  • Total segment EBITDA for the year was Rs. 246 Crores versus Rs. 225 Crores year earlier, rise of 9%.
  • Profit before tax was Rs. 172 Crores for the year compared to Rs. 153 Crores year earlier, which is a rise of 12%, and net profit after tax was Rs. 134 Crores as compared to Rs. 126 crores year earlier, rise of 6%.
  • Liquid terminal division revenues for FY17 was Rs. 154 Crores versus Rs. 170.6 Crores year earlier, and the EBITDA was Rs. 90.7 Crores for FY17 as compared to Rs. 102.4 Crores year earlier.
  • For gas division, revenues in FY17 was Rs. 3,779 Crores versus Rs. 2,043 Crores year earlier. EBITDA for the year FY17 was Rs. 155 Crores versus Rs. 123 Crores, a rise of 26% yoy.
  • As per the details of investor release, ITOCHU will invest Rs. 250 Crores approximately US$39 million
  • Aegis will use part of funds from ITOCHU to significantly accelerate the building of next two LPG terminals, which will most likely be on the West Coast of India.
  • A change in government pricing for auto LPG and follow where they used to have the auto LPG pricing 40% cheaper than petrol but now started doing 50% cheaper.
  • As Pipavav is concerned, currently expecting at 1.4 million tonnes, and are probably somewhere in the range of 800,000 to 1 million tonnes.
  • Strategic sense made for both the companies (ITCHOU & LPG) which also makes financial sense in good valuation and will use part of this money Rs. 250 Crores to invest in other Aegis projects like the two LPG terminals 

Key Company Highlights

  • ITOCHU of Japan, will acquire new shares and take a 19.7% stake in subsidiary HALPG called Hindustan Aegis LPG, which is the Aegis subsidiary, developing and building the LPG terminal in Haldia
  • The negotiation carried out with ITOCHU in Haldia on the valuation, was based on discounted future cash flows of their project, taking into account number of years of projections which is around 10 years of future cash flow projections
  • ITOCHU is the second largest LPG company in the world
  • In quarters '16-'17 Aegis Group International Singapore, directly doing the sourcing business and was no more businesses in Hindustan Aegis which is also the only business in Haldia LPG terminal.

Capex

Aegis capex
  • The whole industry starting from the oil national companies is in a rush to build LPG import capacity.
  • Using Uran, Aegis interconnections into Uran-Chakan pipeline, once infrastructure is ready at Chakan then the total capacity of pipeline is 1.2 million tonnes a year.

Growth

  • The Aegis Auto Gas business, reached 23,217 metric tonnes for the FY17 versus 21,680 metric tonnes, a rise of 7.1% in sales volume and all the LPG segments growing and contributing to the bottom line, resulting in the good increase in the gas division EBITDA last year
  • Packed LPG Cylinders business under the brand name Aegis Puregas, achieved 12,521 metric tonnes for the year FY17 versus 11,904 metric tonnes year earlier, a rise of 5.2%
  • The significance of the ITOCHU deal announcement that is going to speed up Aegis's process even further because the infusion of these funds is only going to speed up the process of building and the next couple of LPG terminals.

Key Operational Highlights

  • The Kandla and Haldia capacity expansion along with very strong business in Mumbai terminals and the existing terminal in Haldia and Kochi these are all doing well
  • The proposed deal with ITOCHU for 19.7% stake in the Haldia LPG project and once deal is completed, will significantly speed up Aegis's next phase of expansion in the LPG business specifically for the next two LPG terminals
  • According to Kandla, Pipavav is a new port, in which its difficult to persuade customers to start out and expect this 100,000 kiloliters when it is commissioned from day one to be fully occupied.

Strategy

  • With BPCL, HPCL had one major contracts with all the other customers and the target for AGI, Aegis Group International in Singapore of 1 million tonnes
  • Planning 100 turns a year in Haldia, which is 100 times, 25,000 Crores to 2.5 million tonnes which already achieving in Mumbai
  • Pipavav, Mumbai started selling gas into North East India through their joint venture in Singapore AGI

Other Updates 

  • Haldia is over 90% capacity utilization and Pipavav unfortunately is still weak but the Q4 is below 20% capacity utilization
  • The demand forecast for India are much higher than was projected earlier because the penetration of LPG is increasing at a much more rapid pace due to new government schemes like the Ujjwala scheme for below the poverty line

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