CMD confirms growth drivers and strategy:
Vopak's capital markets day of 11 November provided confirmation of various growth drivers and the strategic heading of the company. After the meeting, we visited the brand new fully-automated Amsterdam Westpoort terminal (oil products), whose first phase of 0.6m cbm was recently commissioned.
Growth drivers remain intact:
The main growth drivers are population growth, GDP growth, increasing need for transport and mobility, and increasing energy need. Key driver for Vopak is a growing imbalance between the locations where bulk liquids are produced, processed and consumed, which results in growing flows of liquids that need to be stored at the point of departure and the point of entry. In spite of many initiatives in the field of renewables, all forecasts point to sustained demand for oil and gas for decades to come, with growth coming especially from emerging countries led by China.
Growth strategy on course:
Vopak's main value drivers are occupancy improvements, operational efficiency gains, and capacity expansion. The former two have reached sound levels, which leaves capacity expansion as the main value driver in the years to come. Additional efficiency gains should also contribute, but not as much as in previous years. Vopak is expanding its network by 6.2m cbm -a rise of 23% vs. 3Q11 -which will be commissioned in the period up to and including 2014. There are various studies in progress, which could lead to new investment decisions.
Expansion in numbers:
(37,82 EUR, 0,46%) expansion of 6.2m cbm is split as follows: (I) 74% greenfields and 26% expansions; (II) 89% oil, 3% LPG, and 8% chemicals; (III) 45% OEMEA, 2% CEMEA, and 53% Asia; (IV) 71% in JVs and 29% via subsidiaries; (V) 10% in 2011, 35% in 2012, 34% in 2013, and 21% in 2014.
2013 targets repeated:
For 2013, management targets EBITDA including net income from associates of between € 725-800m. In view of new capacity becoming operational in the course of 2013 and 2014, a new 2015 target would actually make more sense as that would represent full earnings capacity. This is not (yet?) in the cards.
We maintain our neutral view on the share
Whereas most companies are struggling to look beyond the next fiscal quarter, Vopak has visibility into 2013 and beyond. Its defensive characteristics have been very rewarding tothe share price, both in absolute terms and relative terms. However, valuation multiples have risen to former peak levels, and thus we believe there is limited upside. Hence, we maintain our Hold rating.