Global Ports - Among the Last Without a Local Listing

Global Ports continues to gain market share and is proving resilient in the face of the Covid-driven economic downturn, even managing container throughput growth of 7.1% y-o-y in 9m20. We believe the stock has significant fundamental upside, but there are few short-term triggers on the horizon. The market share gains may not necessarily translate into increased revenues, while currently Global Ports is facing lower revenues per TEU. In addition, dividend payments are only likely to resume after 2022. One potential positive development for the stock's liquidity and sentiment in general could be if the company opts for a local listing, given that it is among the few names without one. We have updated our model to incorporate the 1H20 financials and 3Q20 operating figures and switched to a pure DCF-based valuation, which has led us to lower our target price by 8% to $4.51 per GDR.> Market share gains... Global Ports continued to outperform the market in 9m20, with container throughput expanding 7.1%, while the market declined 2.4%. The company's volumes appear immune to the impact of the crisis.> ...offset by lower revenues per TEU. The company's prices have proven more vulnerable to the downturn, however. Global Ports has provided special discounts to its clients (such as free storage). The rising share of containerized exports is also pressuring revenues, as loaded exports are cheaper than loaded imports. As a result, revenues per TEU dropped 11% in 1H20.> Long-term fundamental drivers intact. Global Ports continues to generate positive FCF and deleverage. We expect net debt/EBITDA to slide back below 2.0 in 2022 and trigger a return to dividends.> Local listing. The company has not applied for a listing on the Moscow Exchange and indeed has not officially announced any plans to do so. But it is now among just a handful of Russian names without a local listing. Given the recent trend of listing locally, we think that Global Ports might eventually follow suit. This would improve stock liquidity and act as a positive short-term trigger for the stock, in our view.> BUY reiterated. We have lowered our target price to $4.51 per GDR, but we reiterate our BUY recommendation.