TransContainer PAO (BE:TRCNq) announced its third quarter IFRS results on 28 November, revealing continued growth in net income and EBITDA, driven by increased container traffic (y-o-y and q-o-q) and falling empty run ratios. Net income grew by 33% from second quarter levels and was more than double that seen in the same period last year. EBITDA margins increased to record levels of 50.3%. We expect margins to return to more normal levels, but remain strong (c 40%) in the long term aided by continued market growth. The company continues to trade well below global peers on EV metrics and our valuation of RUB5,100/share (derived from a mix of EV/EBITDA and DCF methodologies) indicates around 15% upside in the shares.
Strong operational performance in Q317
CAGR growth over the last three years has averaged 7% in rail container transportation with import and domestic routes the main drivers over that period. However, absolute growth over the last 12 months has come from export, import and transit routes indicating growth across the company’s markets. Meanwhile, margins have been increased by better performance in empty runs, where Q317 performance fell to 16.7% (from 22.1%).
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