ASEAN Port Investment Outlook till Year 2020
ASEAN Port investment
outlook till 2020
Wednesday 11 and Thursday 12 June 2014
JW Marriott, Jakarta, Indonesia
Copyright notice
This Report is for the sole use of the purchaser and is not to be copied or distributed outside of the
client organisation
Jason Chiang
Director
Drewry Maritime Advisors
2
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
0
About Us
Since its founding in 1970, Drewry has grown into
one of the world's most respected international
maritime research & advisory providers.
LONDON
SHANGHAI
DELHI
SINGAPORE
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
Evaluation criteria: South East Asian container port
Outlook till 2020
GOOD
FAIR
POOR
Container volume
• Strong growth or captive volume
• Competitive landscape
• Gateway or transhipment
Strong margins
• Tariff levels
• Sufficient operating margins
Investment access
• Does the country welcome foreign ownership?
• Are there investment opportunities?
Transaction price
• Price dependent on willing buyer, willing seller
• Future trends
© Drewry 2014
3
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
© Drewry 2014
4
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
Drivers: Container volume growth
Growth drivers for container volumes growth remain largely unchanged.
Induced
• Vessel upsizing => Fewer port
calls, selected hub ports
Container Shipping
volumes (million TEU)
150.00
100.00
50.00
0.00
0
20,000 40,000 60,000 80,000
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
Container tonnage to
general cargo
Laden
gateway
80%
60%
40%
20%
0%
Percentage of MTs
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
Empty
containers
Percentage Transhipment
40.0%
30.0%
Transhipment
20.0%
10.0%
0.0%
979
982
985
988
991
994
997
000
003
006
009
012
Accidental
•Trade imbalances resulting in
more/less import/exports
Laden
gateway
200.00
Container to total general
cargo tonnage ratio
Percentage of MTs
Substitution
•Containerization of general cargo
• Key driver historically for gateway
laden containers
Container shipping volumes
against world GDP
% transhipment
Organic
• Economic growth
• Income levels => Import
• Manufacturing => Export
© Drewry 2014
5
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
Revenue sources: Container port
Stevedoring accounts for the bulk of terminal operator’s revenue.
Gateway terminals generate higher unit revenues than empty and transhipment terminals.
Typical SEA port operator revenue sources
Stevedoring tariffs per move (US$)
Non
stevedoring
11%
Typical SEA port tariff structure (per move US$)
60.00
50.00
40.00
30.00
20.00
10.00
0.00
Gateway laden 20"
Stevedoring
89%
Gateway empty 20" Transhipment laden
20"
Revenue
Tariff
89% of the typical SEA terminal operator’s revenue is
from stevedoring. Remainder from storage and other
auxiliary services.
While incurring similar costs to perform, gateway laden
tariffs are generally higher than empty and transhipment
tariffs.
© Drewry 2014
6
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
Historical: South East Asia port container volume
SEA port volumes grew from 34.5 million TEU in 2000 to 89.3 million TEU in 2013, a 7.6% CAGR. 40 million TEU are
transhipment laden. Transhipment and empty containers accounted for 61% of total throughput in 2013.
SEA container terminal throughput, 2000-2013 (million TEU)
Containers CAGR
64%
100.00
2000-2013
90.00
Volume (million TEU)
70.00
60%
60.00
58%
50.00
40.00
56%
30.00
20.00
Transhipment (laden) + Empty % of total
62%
80.00
Empty
8.2%
Transhipment
(laden)
8.1%
Gateway
(laden)
6.9%
Total
throughput
7.6%
54%
10.00
52%
0.00
2000
2001
2002
Gateway (laden)
2003
2004
2005
Transhipment (laden)
2006
2007
Empty
2008
2009
2010
2011
2012
2013
Transhipment (laden) + Empty % of total
© Drewry 2014
7
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
Drivers: Container volume growth momentum and trends (2020)
Economy and containerization will be key growth drivers for the region.
Substitution growth: Containerization continues to drive
gateway (laden) volume growth
60
50
90%
80%
containerization (%)
Gateway laden volume (million
TEU)
Organic growth: Gateway (laden) growth continues to be driven
by economic growth
40
30
20
10
70%
60%
50%
40%
30%
20%
10%
0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
0%
5.0
SEA GDP (trillion USD)
Accidental growth: Empty volume growth to remain stable
84%
Induced growth: Transhipment to remain stable as region
already has high transhipment incidence
O
64%
82%
81%
80%
79%
O
62%
transhipment (%)
Gateway (%)
83%
60%
58%
56%
78%
54%
77%
52%
© Drewry 2014
8
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
Outlook: South East Asia port container volume
International transhipment hubs located in Straits of Malacca along the Far East-Europe route. Indonesia, Thailand,
Malaysia, Vietnam and Philippines combine for a huge 41.4 million TEU market.
0.56
Myanmar
Regional volume
8.1
Gateway
and
domestic
hubs
Thailand
0.28
7.1
Gateway
and
domestic
hubs
•
International transhipment hubs
located along the Far East –
Europe/Med trades. Transhipment
hubs likely remain the same as
ships upsize to 18,000 across the
shipping lines.
•
Main gateway ports of Indonesia,
Malaysia, Vietnam, Philippines and
Thailand with Indonesia being the
largest.
5.7
Gateway
and
domestic
hubs
Vietnam
Philippines
13.5
0.13
7.8
Main
28.1 4.5
transhipment
hub
Gateway
and
12.7
domestic
hubs
Indonesia
Legend
Gateway
Transshipment
© Drewry 2014
9
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
10
Outlook: South East Asia port container volume
Volume projections 2013-2020: Gateway: 6.6%, transhipment 5.1%.
Container port gateway volume outlook CAGR, 2013-2020*
Vietnam
9.2%
Thailand
6.2%
Singapore
3.1%
Philippines
5.5%
Malaysia
6.0%
Indonesia
7.3%
Myanmar
6.6%
Cambodia
5.5%
Brunei
0.0%
Transhipment
2013-2020
CAGR 5.1%
•
9.7%
2.0%
4.0%
6.0%
8.0% 10.0% 12.0%
Volume drivers
• Manufacturing bases:
Thailand, Indonesia, Vietnam
• Agricultural: Malaysia,
Philippines
• Import dependent:
Singapore, Myanmar,
Cambodia
Drewry projections based on economic outlook
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
11
Outlook: South East Asia port tariff
Gateway port tariffs in South East Asia range widely. Key factors include the tariff policy as well as the level of
competition.
SEA container stevedore tariff gateway 20” (USD) *
Vietnam
Thailand
Singapore
Philippines
Myanmar
Malaysia
Indonesia
Cambodia
0
20
40
60
80
100
120
Tariff drivers
• Over competition: Vietnam,
Thailand
• Tariff policy: Philippines,
Indonesia, Thailand
• Limited competition:
Singapore, Myanmar
* Drewry estimates from public tariff and shipping lines
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
12
Outlook: South East Asia port EBITDA margins*
South East Asia port EBITDA margins are generally positive (exclude concessions).
SEA container terminal operator EBITDA margin (%)
Vietnam
Thailand
Singapore
Philippines
Myanmar
Malaysia
Indonesia
Cambodia
0%
20%
40%
60%
80%
Margin drivers
• Limited competition: :
Philippines, Singapore,
Myanmar
• Intense competition: Vietnam
• Improving capacity
utilization: Thailand
• High cost of operations:
Cambodia
Margins are derived based on estimates of tariff, volume and operating expenses.
Concession payments are not included
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
13
Outlook: South East Asia container port investment
Country outlook is positive for Philippines, Myanmar and Indonesia. Viable investment opportunities can be found in
the region.
•
•
•
•
•
Myanmar
HPH present
Mainly imports.
Exports require
manufacturing to
take root
Limited
competition
•
•
•
•
Thailand
Foreign investment encouraged in LCB
Industries affected by flood and political
uncertainty
Margins increasing with capacity utilization
•
•
•
Vietnam
•
•
•
Singapore
PSA base of
operations
More than 80% is
transhipment.
Margins healthy due
to keen cost
management
•
•
Access Volume
Tariff
Margin
Thailand
Cambodia
Philippines
State owned enterprises
Captive volumes
Margins eroded by high
cost of operations
Cambodia
Myanmar
Foreign investment encouraged
Volume growth steady
Margins pressured due to
overcapacity
•
Country
•
Malaysia
Limited opportunities,
Westport IPO
Captive volumes
Steady margins
•
•
Philippines
ICTSI base of operations.
DPW present
Steady volume growth,
mainly in Manila
Low cost environment,
gateway pricing
Vietnam
Malaysia
Singapore
Indonesia
•
•
•
Indonesia
Kalibaru, Cilamaya concessions
Strong growth.
Healthy margins
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
14
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
15
Historical transaction: Container port EV/EBITDA
Port transactions rose to historical highs in 2007 to current 10-12X EV/EBITDA valuations. At each time phase,
different investor classes were active in acquiring assets.
30.0
Initial: Terminal operator
Interim: Investment fund
25.0
Recent: Private equity fund
Investment funds
became active,
pushing valuations
to as high as 30X
EV/EBITDA
20.0
15.0
18.4
Dubai Ports
International
(today's DP World)
bought CSX.
HPH acquire
ICTSI
overseas
assets
GIP acquires
Brisbane and
Sydney ports
15.4
12.2
10.0
10.1
12.0
10.7
10.7
9.8
9.1
8.3
6.9
7.1
7.0
DPW acquired
P&O ports
5.0
PSA acquired
HNN
0.0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
16
Financial performance : Container maritime assets
Ports are an attractive asset class for investors due to steady margins and returns.
Container port:
Steady, positive returns
Container shipping:
High volatility
70.0%
60.0%
EBITDA margin
50.0%
40.0%
2009
30.0%
2010
20.0%
2011
2012
10.0%
0.0%
Maersk Line
-10.0%
Neptune
Evergreen
Orient Line
Hanjin
Major shipping lines
Orient
Overseas
Hyundai
APM
Terminals
DP World
PSA
International
ICTSI
Hutchison
Port
Holdings
HHLA AG
Major port operators
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
17
Financial benchmarks: Port transaction
List port companies can be used as benchmarks for private transactions
25.0
25.0
19.5
20.0
20.0
19.6
18.0
EV/EBITDA
EV/EBITDA
17.2
17.2
15.0
15.0
14.0
12.8
11.3
10.0
10.0
9
9.2
7.5
7.5
6.7
7.1
7.1
5.0
5.0
0.0
0.0
2000
2000
7.0
7.0
2001
2001
2002
2002
10.5
10.8
10.7
10.7
12.3
12.3
11.2
11.2
11.8
11.9
10.0
9.7
9.0
9.6
9.6
7.5
9.0
9.0
7
7.1
6.8
6.8
12.0
12.0
10.1
10.1
8.5
8.5
10.3
10.3
9.4
9.4
9.2
9.2
9.3
9.3
2012
2012
2013
2013
2014
2014
7.5
7.5
Valuation gaps
2003
2003
2004
2004
2005
2005
2006
2006
2007
2007
2008
2008
2009
2009
2010
2010
2011
2011
Private port Private
transactions
(less majority stakes)Listed port valuations
Listed port valuations
port transactions
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
18
Outlook: Port investment
Increase in US interest rates would result in higher interest payments by terminal operators with US denominated
debt. Investors would have to seek alternative sources of funding for future acquisitions.
Increasing use of
debt as interest
rates lower
9%
8%
Operators load up
on debt with likely
increase in interest
rates
Interest rates high,
higher use of equity
8%
7%
7%
6%
6%
6%
5%
5.0%
6%
5.0%
4%
3%
3%
2%
Operators careful
about using debt.
1%
6%
Fed indicates
intention to
increase rates.
Financial crisis, Fed
lower rates to
absolute lows.
1.9%
1%
0.2%
0%
2006
2007
2008
2009
Interest as % of revenue
0.2%
2010
0.1%
2011
0.1%
2012
0.1%
2013
Fed rates
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
19
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
20
In conclusion
US and European economies have recovered.
Possible increase in interest rates would affect
port valuations in near future
Asean region economies in better shape and
projected to grow strongly => Container trade
growth likely to be centered in Asia.
Opportunities for investing in Asian ports are
limited but comes with the assurance of
captive volumes. Margins remain a concern.
Careful due diligence required.
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
21
Contact
Head Office – UK
Drewry Shipping Consultants Ltd
15-17 Christopher Street
London EC2A 2BS,
United Kingdom
t: +44 (0)20 7538 0191
e: enquiries@drewry.co.uk
India Office
Drewry Maritime Services Private Limited
209 Vipul Square,
Sushant Lok-1 Gurgaon, Haryana-122002,
India
t: +91 124 497 4979
e: india@drewry.co.uk
Jason Chiang
Director
chiang@drewry.co.uk
Singapore Office
Drewry Maritime Services (Asia) Pte, Ltd.
15 Hoe Chiang Road
#13-02 Tower fifteen
Singapore 089316
t: +65 6220 9890
e: singapore@drewry.co.uk
Shanghai Office
555, 5th floor Standard Chartered Tower,
201 Shi Ji Avenue,
Pudong District,
Shanghai, China 200120
t: +86 (0)21 6182 6759
e: info@drewry.co.uk
© Drewry 2014
outlook till 2020
Wednesday 11 and Thursday 12 June 2014
JW Marriott, Jakarta, Indonesia
Copyright notice
This Report is for the sole use of the purchaser and is not to be copied or distributed outside of the
client organisation
Jason Chiang
Director
Drewry Maritime Advisors
2
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
0
About Us
Since its founding in 1970, Drewry has grown into
one of the world's most respected international
maritime research & advisory providers.
LONDON
SHANGHAI
DELHI
SINGAPORE
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
Evaluation criteria: South East Asian container port
Outlook till 2020
GOOD
FAIR
POOR
Container volume
• Strong growth or captive volume
• Competitive landscape
• Gateway or transhipment
Strong margins
• Tariff levels
• Sufficient operating margins
Investment access
• Does the country welcome foreign ownership?
• Are there investment opportunities?
Transaction price
• Price dependent on willing buyer, willing seller
• Future trends
© Drewry 2014
3
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
© Drewry 2014
4
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
Drivers: Container volume growth
Growth drivers for container volumes growth remain largely unchanged.
Induced
• Vessel upsizing => Fewer port
calls, selected hub ports
Container Shipping
volumes (million TEU)
150.00
100.00
50.00
0.00
0
20,000 40,000 60,000 80,000
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
Container tonnage to
general cargo
Laden
gateway
80%
60%
40%
20%
0%
Percentage of MTs
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
Empty
containers
Percentage Transhipment
40.0%
30.0%
Transhipment
20.0%
10.0%
0.0%
979
982
985
988
991
994
997
000
003
006
009
012
Accidental
•Trade imbalances resulting in
more/less import/exports
Laden
gateway
200.00
Container to total general
cargo tonnage ratio
Percentage of MTs
Substitution
•Containerization of general cargo
• Key driver historically for gateway
laden containers
Container shipping volumes
against world GDP
% transhipment
Organic
• Economic growth
• Income levels => Import
• Manufacturing => Export
© Drewry 2014
5
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
Revenue sources: Container port
Stevedoring accounts for the bulk of terminal operator’s revenue.
Gateway terminals generate higher unit revenues than empty and transhipment terminals.
Typical SEA port operator revenue sources
Stevedoring tariffs per move (US$)
Non
stevedoring
11%
Typical SEA port tariff structure (per move US$)
60.00
50.00
40.00
30.00
20.00
10.00
0.00
Gateway laden 20"
Stevedoring
89%
Gateway empty 20" Transhipment laden
20"
Revenue
Tariff
89% of the typical SEA terminal operator’s revenue is
from stevedoring. Remainder from storage and other
auxiliary services.
While incurring similar costs to perform, gateway laden
tariffs are generally higher than empty and transhipment
tariffs.
© Drewry 2014
6
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
Historical: South East Asia port container volume
SEA port volumes grew from 34.5 million TEU in 2000 to 89.3 million TEU in 2013, a 7.6% CAGR. 40 million TEU are
transhipment laden. Transhipment and empty containers accounted for 61% of total throughput in 2013.
SEA container terminal throughput, 2000-2013 (million TEU)
Containers CAGR
64%
100.00
2000-2013
90.00
Volume (million TEU)
70.00
60%
60.00
58%
50.00
40.00
56%
30.00
20.00
Transhipment (laden) + Empty % of total
62%
80.00
Empty
8.2%
Transhipment
(laden)
8.1%
Gateway
(laden)
6.9%
Total
throughput
7.6%
54%
10.00
52%
0.00
2000
2001
2002
Gateway (laden)
2003
2004
2005
Transhipment (laden)
2006
2007
Empty
2008
2009
2010
2011
2012
2013
Transhipment (laden) + Empty % of total
© Drewry 2014
7
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
Drivers: Container volume growth momentum and trends (2020)
Economy and containerization will be key growth drivers for the region.
Substitution growth: Containerization continues to drive
gateway (laden) volume growth
60
50
90%
80%
containerization (%)
Gateway laden volume (million
TEU)
Organic growth: Gateway (laden) growth continues to be driven
by economic growth
40
30
20
10
70%
60%
50%
40%
30%
20%
10%
0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
0%
5.0
SEA GDP (trillion USD)
Accidental growth: Empty volume growth to remain stable
84%
Induced growth: Transhipment to remain stable as region
already has high transhipment incidence
O
64%
82%
81%
80%
79%
O
62%
transhipment (%)
Gateway (%)
83%
60%
58%
56%
78%
54%
77%
52%
© Drewry 2014
8
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
Outlook: South East Asia port container volume
International transhipment hubs located in Straits of Malacca along the Far East-Europe route. Indonesia, Thailand,
Malaysia, Vietnam and Philippines combine for a huge 41.4 million TEU market.
0.56
Myanmar
Regional volume
8.1
Gateway
and
domestic
hubs
Thailand
0.28
7.1
Gateway
and
domestic
hubs
•
International transhipment hubs
located along the Far East –
Europe/Med trades. Transhipment
hubs likely remain the same as
ships upsize to 18,000 across the
shipping lines.
•
Main gateway ports of Indonesia,
Malaysia, Vietnam, Philippines and
Thailand with Indonesia being the
largest.
5.7
Gateway
and
domestic
hubs
Vietnam
Philippines
13.5
0.13
7.8
Main
28.1 4.5
transhipment
hub
Gateway
and
12.7
domestic
hubs
Indonesia
Legend
Gateway
Transshipment
© Drewry 2014
9
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
10
Outlook: South East Asia port container volume
Volume projections 2013-2020: Gateway: 6.6%, transhipment 5.1%.
Container port gateway volume outlook CAGR, 2013-2020*
Vietnam
9.2%
Thailand
6.2%
Singapore
3.1%
Philippines
5.5%
Malaysia
6.0%
Indonesia
7.3%
Myanmar
6.6%
Cambodia
5.5%
Brunei
0.0%
Transhipment
2013-2020
CAGR 5.1%
•
9.7%
2.0%
4.0%
6.0%
8.0% 10.0% 12.0%
Volume drivers
• Manufacturing bases:
Thailand, Indonesia, Vietnam
• Agricultural: Malaysia,
Philippines
• Import dependent:
Singapore, Myanmar,
Cambodia
Drewry projections based on economic outlook
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
11
Outlook: South East Asia port tariff
Gateway port tariffs in South East Asia range widely. Key factors include the tariff policy as well as the level of
competition.
SEA container stevedore tariff gateway 20” (USD) *
Vietnam
Thailand
Singapore
Philippines
Myanmar
Malaysia
Indonesia
Cambodia
0
20
40
60
80
100
120
Tariff drivers
• Over competition: Vietnam,
Thailand
• Tariff policy: Philippines,
Indonesia, Thailand
• Limited competition:
Singapore, Myanmar
* Drewry estimates from public tariff and shipping lines
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
12
Outlook: South East Asia port EBITDA margins*
South East Asia port EBITDA margins are generally positive (exclude concessions).
SEA container terminal operator EBITDA margin (%)
Vietnam
Thailand
Singapore
Philippines
Myanmar
Malaysia
Indonesia
Cambodia
0%
20%
40%
60%
80%
Margin drivers
• Limited competition: :
Philippines, Singapore,
Myanmar
• Intense competition: Vietnam
• Improving capacity
utilization: Thailand
• High cost of operations:
Cambodia
Margins are derived based on estimates of tariff, volume and operating expenses.
Concession payments are not included
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
13
Outlook: South East Asia container port investment
Country outlook is positive for Philippines, Myanmar and Indonesia. Viable investment opportunities can be found in
the region.
•
•
•
•
•
Myanmar
HPH present
Mainly imports.
Exports require
manufacturing to
take root
Limited
competition
•
•
•
•
Thailand
Foreign investment encouraged in LCB
Industries affected by flood and political
uncertainty
Margins increasing with capacity utilization
•
•
•
Vietnam
•
•
•
Singapore
PSA base of
operations
More than 80% is
transhipment.
Margins healthy due
to keen cost
management
•
•
Access Volume
Tariff
Margin
Thailand
Cambodia
Philippines
State owned enterprises
Captive volumes
Margins eroded by high
cost of operations
Cambodia
Myanmar
Foreign investment encouraged
Volume growth steady
Margins pressured due to
overcapacity
•
Country
•
Malaysia
Limited opportunities,
Westport IPO
Captive volumes
Steady margins
•
•
Philippines
ICTSI base of operations.
DPW present
Steady volume growth,
mainly in Manila
Low cost environment,
gateway pricing
Vietnam
Malaysia
Singapore
Indonesia
•
•
•
Indonesia
Kalibaru, Cilamaya concessions
Strong growth.
Healthy margins
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
14
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
15
Historical transaction: Container port EV/EBITDA
Port transactions rose to historical highs in 2007 to current 10-12X EV/EBITDA valuations. At each time phase,
different investor classes were active in acquiring assets.
30.0
Initial: Terminal operator
Interim: Investment fund
25.0
Recent: Private equity fund
Investment funds
became active,
pushing valuations
to as high as 30X
EV/EBITDA
20.0
15.0
18.4
Dubai Ports
International
(today's DP World)
bought CSX.
HPH acquire
ICTSI
overseas
assets
GIP acquires
Brisbane and
Sydney ports
15.4
12.2
10.0
10.1
12.0
10.7
10.7
9.8
9.1
8.3
6.9
7.1
7.0
DPW acquired
P&O ports
5.0
PSA acquired
HNN
0.0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
16
Financial performance : Container maritime assets
Ports are an attractive asset class for investors due to steady margins and returns.
Container port:
Steady, positive returns
Container shipping:
High volatility
70.0%
60.0%
EBITDA margin
50.0%
40.0%
2009
30.0%
2010
20.0%
2011
2012
10.0%
0.0%
Maersk Line
-10.0%
Neptune
Evergreen
Orient Line
Hanjin
Major shipping lines
Orient
Overseas
Hyundai
APM
Terminals
DP World
PSA
International
ICTSI
Hutchison
Port
Holdings
HHLA AG
Major port operators
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
17
Financial benchmarks: Port transaction
List port companies can be used as benchmarks for private transactions
25.0
25.0
19.5
20.0
20.0
19.6
18.0
EV/EBITDA
EV/EBITDA
17.2
17.2
15.0
15.0
14.0
12.8
11.3
10.0
10.0
9
9.2
7.5
7.5
6.7
7.1
7.1
5.0
5.0
0.0
0.0
2000
2000
7.0
7.0
2001
2001
2002
2002
10.5
10.8
10.7
10.7
12.3
12.3
11.2
11.2
11.8
11.9
10.0
9.7
9.0
9.6
9.6
7.5
9.0
9.0
7
7.1
6.8
6.8
12.0
12.0
10.1
10.1
8.5
8.5
10.3
10.3
9.4
9.4
9.2
9.2
9.3
9.3
2012
2012
2013
2013
2014
2014
7.5
7.5
Valuation gaps
2003
2003
2004
2004
2005
2005
2006
2006
2007
2007
2008
2008
2009
2009
2010
2010
2011
2011
Private port Private
transactions
(less majority stakes)Listed port valuations
Listed port valuations
port transactions
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
18
Outlook: Port investment
Increase in US interest rates would result in higher interest payments by terminal operators with US denominated
debt. Investors would have to seek alternative sources of funding for future acquisitions.
Increasing use of
debt as interest
rates lower
9%
8%
Operators load up
on debt with likely
increase in interest
rates
Interest rates high,
higher use of equity
8%
7%
7%
6%
6%
6%
5%
5.0%
6%
5.0%
4%
3%
3%
2%
Operators careful
about using debt.
1%
6%
Fed indicates
intention to
increase rates.
Financial crisis, Fed
lower rates to
absolute lows.
1.9%
1%
0.2%
0%
2006
2007
2008
2009
Interest as % of revenue
0.2%
2010
0.1%
2011
0.1%
2012
0.1%
2013
Fed rates
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
19
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
20
In conclusion
US and European economies have recovered.
Possible increase in interest rates would affect
port valuations in near future
Asean region economies in better shape and
projected to grow strongly => Container trade
growth likely to be centered in Asia.
Opportunities for investing in Asian ports are
limited but comes with the assurance of
captive volumes. Margins remain a concern.
Careful due diligence required.
© Drewry 2014
Drewry Maritime Advisors | 12th ASEAN Ports and Shipping 2014
21
Contact
Head Office – UK
Drewry Shipping Consultants Ltd
15-17 Christopher Street
London EC2A 2BS,
United Kingdom
t: +44 (0)20 7538 0191
e: enquiries@drewry.co.uk
India Office
Drewry Maritime Services Private Limited
209 Vipul Square,
Sushant Lok-1 Gurgaon, Haryana-122002,
India
t: +91 124 497 4979
e: india@drewry.co.uk
Jason Chiang
Director
chiang@drewry.co.uk
Singapore Office
Drewry Maritime Services (Asia) Pte, Ltd.
15 Hoe Chiang Road
#13-02 Tower fifteen
Singapore 089316
t: +65 6220 9890
e: singapore@drewry.co.uk
Shanghai Office
555, 5th floor Standard Chartered Tower,
201 Shi Ji Avenue,
Pudong District,
Shanghai, China 200120
t: +86 (0)21 6182 6759
e: info@drewry.co.uk
© Drewry 2014