Global Ports - Weak 4Q21 Trading Update, but the Situation Has Normalized

Global Ports has published a 4Q21 trading update containing negative Q-o-Q dynamics due to technical issues experienced at the VSC terminal in October. We regard the results as negative, though we note that activity at the terminal has already returned to normal.> Global Ports has published a 4Q21 trading update. Consolidated container throughput declined 0.9% y-o-y and 4.1% Q-o-Q to 385k TEU, missing our forecast by 5%. The Russian container market showed stronger growth of 4.4% y-o-y and 7.1% Q-o-Q during the quarter.> For the full year, container throughput grew 2.8% to 1.576 mln TEU (1.5% below our estimate). The market posted higher growth of 7.1% (to 5.4 mln TEU) thanks to an exceptionally solid performance by the Kaliningrad-based terminals (+56% y-o-y), where the company has no footprint, and the Far East (+14%). > Global Ports' consolidated market share fell from 30.2% to 29.2% in 2021. Its share did increase slightly in some locations, from 27.3% to 27.4% in the Far East and from 50.3% to 51.0% in the Baltics excluding Kaliningrad (i.e. St Petersburg and the St Petersburg area), where it operates. > The drop in Global Ports' container volumes in 4Q21 was caused by a 10.6% Q-o-Q decline in container throughput at its Far East terminal, VSС. The company attributes this to VSC switching over to advanced terminal operating software and has described the negative impact as temporary. VCS ceased coal-handling operations in 3Q21 to fully focus on containers to meet burgeoning demand for container handling, and the company decided to update its operating software at VSC during this process.We consider the published results to be weak, as we did not expect such a drop in 4Q21 container volumes. We calculate that 2021 EBITDA could now come in $2.8 mln (1.3%) below our forecast unless it is compensated for by stronger prices. According to the company, VSC's volumes in December were some 50% above the October level (47k TEU versus 31k TEU) and 14% ahead of the monthly average in 3Q21 (41.3k TEU). This indicates that the situation at VSC has returned to normal.