Port on sale

The state is planning to sell its 20% share stake of Novorossiysk Commercial Seaport OJSC in 2010. As per the experts opinion there is an opportunity to procure shares of the stevedoring company with a significant discount to the date.  At the same time companies-cargo owners and traders are hardly interested in the fact. As of experts’ estimations, commercial value of each stake may be $900 mln.

Russian Government intends to reduce the share of federal property in the economy. As per Government press-service with reference to Vladimir Putin, RF Prime-Minister, ‘we consider privatization as one of the key means of structural reforms in the existing sector of economy, improvement of compatibility and involvement of additional investments’.

Among the enterprises which state stake shall be sold to the investors there is the largest Russia’s stevedoring company Novorossiysk Commercial Seaport OJSC (NCSP). In 2008 cargo turnover of NCSP group amounted to 81.6 mln tons. Stevedoring company representatives announces the plans on new terminals construction in 2010 with an investment volume of $100 mln. NCSP is included into the list of subjects of state monopolies in the sphere of services in transport terminals, ports, airports managed by the RF Federal Tariffs Service (FTS). The state represented by Federal Agency for Federal Property Management holds 20.0001% of port’s shares.

On the one hand the stake of 20% is too little to interest investors; on the other hand it is possible to hope for the stake increase by shares procurement at an open market.

It is necessary to remind that shares of NCSP OJSC are quoted at the Russian stock exchanges RTS and MCSE (NMTP) as well as at London Stock Exchange (NCSP). Initial public issue of shares took place in 2007. The price of NCSP shares issuing under IPO amounted to $0.2560 per a share. Market capitalization of NCSP that time was estimated $4.9 bln.

As per Olga Denschikova, Marketing director of National container company (NCC, manages First container terminal in St.-Petersburg, NUTEP in Novorossiysk, ULCT in Ust-Luga and a number of other assets), those companies which business connected with the Black Sea region can be interested in the state stake purchase of NCSP. ‘As for NCC we are hardly interested in this asset as we already manage NUTEP container terminal in Novorossiysk and invest into its development,’ highlighted Olga Denschikova in the interview with PortNews IAA.

As per Alexandr Ignatyuk, analyst of Energocapital Investment Company, the package offered by the state in the enough attractive assets which is NCSP can attract more-or-less strategic investor. ‘Anyways it will not be speculative players for a year or two. The time of sale is quite profitable from the point of view of the customer: there is a significant discount at the market as compared to the prices before economic recession, but the interest to transport assets will be gradually resumed,’ thinks the expert. Alexandr Ignatyuk explained in the interview with PortNews IAA that 20%-stake does not decide anything, but can be a good beginning for entering the asset, at least 10% of NCSP shares can be procured at an open market.

 As per Konstantin Romanov, analyst of FINAM investment company, the current market price of the stake amounts to about $620 mln. Fair cost of the given stake is estimated by FINAM as $880-900 mln.

‘Current shareholders will be the most probable buyers of the stake: Alexandr Ponomarenko, Chairman of the Board of Directors and the bodies related to Alexandr deputy,’ suggested Konstantin Romanov in the interview with PortNews IAA. As per him, it is not without exception that the stake may be interesting for large portfolio investors that are interested in entering the capital of one of the most perspective assets of transport branch.

As per FINM, there are 29.9% of shares in free-float, but it will be impossible to take control over the company having bought all the free-float shares. Thus such a scenario seams less probable to us, mentioned the expert.

FINAM estimates operational results of NCSP in October as negative ones. Overall cargo turnover of NCSP decreased by 13.7% in October, 2009 against the corresponding period of 2008 and it continued September decrease having gone down by 6.2% as compared to the corresponding period of 2008. ‘Nevertheless we assume that partial reduction of the cargo turnover by the end of 2009 is already allowed for in market quotes. In particular, we predict only 3.6%-increase of the cargo turnover in 2009 against 2008 results. But NCSP cargo turnover growth within 10 months 2009 looks good against overall decrease of transport figure within the reporting period,’ commented Konstantin Romanov.

It is necessary to remind that under RAS net profit of NCSP OJSC increased by 2.1 time (to RUR4.268 bln) within 9 months, 2009 as compared to the corresponding period of 2008. Company’s income increased by 1.5 time (to RUR8.9 bln).

Consolidated income of the group under consolidated International Financial Reporting (IFRS) Standards decrease by 18.7% (to $97.466 mln), income increased by 6.2% (to $334.1 mln) within 6 months that were over on June 30, 2009. Consolidated income of NCSP under IFRS amounted to $653.777 mln in 2008.

Find more details on NCSP overall cargo turnover statistics in January-October, 2009 here.