TRCN TransContainer

Edison Investment Research Limited: Edison issues outlook on TransContainer (TRCN)

Edison Investment Research Limited
Edison Investment Research Limited: Edison issues outlook on TransContainer (TRCN)

25-Sep-2018 / 13:10 GMT/BST

London, UK, 25 September 2018

Edison issues outlook on TransContainer (TRCN)

TransContainer (TC) has continued to show strong results, with Q218 EBITDA, reported on 29 August, increasing by 13% y-o-y. The company is benefiting from structural growth, especially switching rail cargo to containers, and Russia's economic recovery. Recent monthly market data bode well for TC's Q318 results. It has also continued to pursue initiatives that are benefiting the EBITDA margin by increasing the proportion of Integrated Services, profit-making runs and block trains. Our DCF model gives a valuation of RUB5,200/share (unchanged), which offers 12% upside to the current share price.

We have maintained our valuation of TC at RUB5,200/share. Our valuation offers 12% upside to the current share price and is based on a DCF model, using a WACC of 10.4% and a terminal growth rate of 1%. We think TC seems undervalued compared to the peer group of international rail-based companies given it trades on a 2019e P/E of 9.2x, compared to the average of 15.9x, albeit some discount is probably merited due to Russian risk. We have maintained our current forecasts.

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Reports on TransContainer

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TransContainer - Mandatory tender offer to be launched

Following the sale of a majority stake in TransContainer to Delo Group as a result of the planned auction (at c RUB8,680/share), there is a legal requirement for Delo Group to launch a tender offer to minority shareholders. TransContainer’s Q3 results showed strong earnings growth, albeit at lower rates than previous quarters. We have slightly reduced our DCF-based valuation to RUB9,100/share.

12/10/19 December 10, 2019 6 EN
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TransContainer - Another beat, with structural and cyclical drivers

Both cyclical and structural factors drove strong revenue growth in H119 (adjusted revenues up 32% y-o-y, above our expectations) which, combined with efficiency gains and economies of scale, led to EBITDA growth of 67% y-o-y and net income almost doubling. We forecast growth to continue, albeit at a more moderate pace, as we expect a stabilisation in rail container transportation prices. We have significantly increased our forecasts, which drives a 33% increase in our valuation to RUB9,460/shar...

09/11/19 September 11, 2019 6 EN
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TransContainer - Q1 growth trend exceeds our expectations again

Following TransContainer’s strong Q1 results, with adjusted revenues growing by more than 30% y-o-y, we have further increased our forecasts for FY19–20 (revenue up 6–9%). The growth in Q1 was boosted by increased sales to customers located outside Russia. We have increased our valuation to RUB7,100/share on the back of higher forecasts.

05/31/19 May 31, 2019 6 EN
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TransContainer - FY18 results beat our estimates, forecasts raised

We have raised our FY19 and FY20 revenue forecasts by 3% and net income c 20%, following strong FY18 results that were above our expectations. We expect TransContainer to continue achieving sustained volume growth, benefiting from the structural trend towards growing containerisation and economic growth in Russia. We have increased our DCF-based valuation by 13% to RUB6,100/share.

04/05/19 April 5, 2019 6 EN
TRCN TRANSCONTAINER

TransContainer - Growth accelerating in Q3, forecasts raised

TransContainer delivered a significant step-up in revenue and EBITDA growth in Q3, supported by industry growth, higher efficiencies and a more favourable business mix. We have increased our FY18 forecasts to reflect the strong Q3 results (revenue, EBITDA and net income forecasts rise by 4%, 15% and 26% respectively) and made more modest increases to our FY19 and FY20 forecasts. Our DCF valuation increases by 4% to RUB5,400/share, implying 20% potential upside to the current share price.

12/06/18 December 6, 2018 6 EN

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