Small change in estimates, TP lifted:
Following the slightly better than expected 2011 results, we have tweaked our model, which has resulted in slightly higher earnings estimates, notably re the net income from associates. Bottom-line, the impact is a 3% rise in our 2012 EPS estimate, and a 1% rise in our 2013 EPS estimate. We lift our target price to € 41 (from € 37), based on slightly higher earnings estimates, offset by slightly higher WC and net debt, and we have rolled our valuation tools by one year. Our target price is based on the average outcome of our DCF model and historic valuation models. We stick to our Hold rating.
No quantified guidance for 2012:
Unexpectedly, management only pointed to the direction for 2012 earnings. Traditionally, they provided a range and most analysts had expected them do so again for FY 2012. This makes the outlook seem a bit cautious, but we think there is nothing to be worried about. Recently commissioned capacity contributed nicely to 4Q11 (e.g. Westpoort, GATE, Altamira) and should contribute for the full 12 months in 2012. Meanwhile other new terminals will become operational in the course of 2012, notably in 2Q12 and 3Q12. A pleasant surprise was the so-far-not-disclosed expansion of the Europoort terminal by 400,000 cbm, which should grow the fuel products activities in Rotterdam. The ‘study list’ was also expanded, as it now includes a terminal in Equatorial Guinea.
Working capital explained:
WC deteriorated as debtors increased slightly as a percentage of sales, whereas creditors declined rapidly as a percentage of sales. Management explained they seizedthe opportunity to pay certain creditors faster as that provided them with financial benefits (read: discounts). Our impression is that this relates mainly to milestone payments re construction of new terminals. There is no material change to working capital trends of the day-to-day operations, according to management. The y/y change in WC was € -55m, of which € -36m from debtors-creditors.