For use in the IB Challenge only
2017 UBS Investment Banking Challenge Heat Round case study
April 28, 2017
Strictly confidential
Competition information and logistics Welcome to the 2017 UBS Investment Banking Challenge Now in its 13th year, the UBS Investment Banking Challe nge involves seven universities nationally: the universities of Adelaide, Melbourne, Monash, New South Wales, Queensland, Sydney and Western Australia. The competition provides students with a valuable opportunity to gain both an insight into transaction work that an investment banking analyst should expect to be involved in and the opportunity for winning teams to spend time with UBS investment bankers and interview for the UBS summer internship programs. The Challenge is structured in four stages:
Submission
Heat Round
Campus Final
National Final
5 May 2017
8–12 May 2017
18–19 May 2017
24 May 2017
The strongest teams at each campus will be selected from the Hea t Round to participate in the Campus Final. The Campus Final will be judged by academics and UBS staff and the winners of this round will be invited to present at the National Final at UBS’ Sydney offices, where they will have the opportunity to spend time with investment banking analysts to discuss their presentation. Interstate teams will be flown to Sydney, with flights provided. National Finalists will be awarded cash prizes as follo ws:
1st Place—$5,000
2nd Place—$2,500
3rd Place—$1,500
All National Finalists will be invited to interview for a summer internship at UBS.
Competition logistics The following pages contain the case study for the Heat Round. All teams will be required to submit the ir final presentation, model and a ny additional supporting material by 10am AEST on Friday 5 May to
[email protected]. Teams should include their team name and university in the subject line of the email. Students will be sent an email all ocating them a presentation time between 8–12 May. We will do our best to allocate you a time according to your preferences; however, due to the large number of entrants this is not al ways possible. While the 5 May deadline is not intended to be a screening point for presentations and UBS’ objective is for all teams to present in the Heat Round, UBS reserves all rights as to whether teams will progress to the Heat Round. In preparing, please be aware of the following:
Please arrive at the specified location at least ten min utes prior to your allocated time. Due to schedule restrictions, the judging panel will not wait for late entrants and will not allocate you another presentation time if you do not attend at your allocated time Presentations should be 10 minutes in length. There will be an additional 5 minutes of Q&A. Time limits will be strictly adhered to Presentations must be no longer than 15 pages in length (inclusive of cover page). Any additional materials and/or supporting analysis should be contained in the Appendices Please print out three copies of your presentation to hand to the judges upon arrival Presentations should be in PowerPoint format. A data projector will be provide d. You can bring your presentation on a USB key, but please ensure you have a backup copy An electronic copy of your presentation and Excel calculations will also be required and will form an important part of the assessment Wear suitable business attire to your presentation. You are playing the role of UBS investment bankers, and are expected to dress appropriately
1
The mandate You are performing performing the role of a financial adviser adviser to the Board of Directors Directors of Brookfield Brookfield Infrastructure Partners It is early 2015. You are working a s part of a team engage d to advise Brookfield Infrastructure Partners (“Brookfield”) on a potential acquisition of Asciano Ltd ("Asciano"). Brookfield is a financial acquirer focused on high quality, long-life infrastructure assets. Brookfield seeks to maximise its long-term return on equity and has a preference to fund acquisitions primarily through debt. The Brookfield Board has req uested your team make a short presentation providing your view on an acquisition of Asciano to assist them in executing their strategy. The Board is also intere sted in the suitability of other possible options and justification as to why Asciano i s a superior acquisition target. Following your presentation, the Board will make a decision on whether or not to proceed with a potential acquisition of Asciano or alternative options, so it is important you provide a recommendation as part of your response. You will also be expected to answer any questions the Board may have. General information about Asciano has been compiled for you from public sources, however, you may need to conduct additional research to address any issues raised by the Board. Your presentation should take the form of a professional address to the Board of Directors of Brookfield. The Board expects a concise and thoughtful overview of the merits of the transaction, the key issues of the transaction and a considered recommendation. While it is important to form a view as to the valuation, the Board is not interested in excessive data or detailed methodology. While the Board has provided a list of questions and issues, it is up to you to decide which is the most relevant – you are not expected to cover all of these issues in detail. However, you should think about your response on all of the issues, as they may arise in the questions the Board pose to you. These issues might include:
Brookfield's strategic options for expanding their global transport infrastructure footprint consider whether Asciano is the most appropriate acquisition target, and if now is the right time to execute the transaction – assess whether an acquisition of Asciano will generate acceptable financial returns for Brook field – assess whether Brookfield should acquire all or part of Asciano – determine the main advantages for Brookfield unit holders – consider the key risks involved in the acquisition of Asciano – Assessment and recommendation of the fair value of Asciano your team should consider a discounted cash flo w (“DCF”) valuation as well as co mparable company and precedent transaction – based valuations for the avoidance of doubt, you are not required to conduct a DCF valuation of Brookfield – compare your valuation to Asciano's current trading value – clearly explain the assumptions underlying your valuation model – analyse the benefits and limitations of the various valuation methodologies in valuing Asciano – Recommended offer price for Asciano, form of consideration offered and transaction structure consider an appropriate starting price as well as the maximum that Brookfield should pay – consider the form of consideration Brookfield should offer – The manner in which Brookfield should approach Asciano consider the merits of a friendly or hostile approach – consider whether a takeover bid or a scheme of arrangement would be preferred – The likely response of the Asciano Board and shareholders to an approach explain how Brookfield could maximise the prospect of achieving the Asciano Board’s support – consider how Asciano’s shareholders would be likely to react – Regulatory concerns associated with the transaction Potential counter-bidders or other interested parties Final recommendation
2
The mandate Valuation assumptions assumptions
In your DCF valuation model, you should assume: equity market risk premium of 6.5% – risk free rate of 3.5% – credit spread of 250bps – unlevered beta of 0.7 – 0.8 – tax rate of 30.0% – Valuation date: 30 June 2015 You should form a view on target gearing , based on Asciano's debt capacity and Brookfield's required equity returns
Judging criteria Teams will be assessed on a number of criteria. You may use the following as a guide: Understanding of the strategic rationale for the transaction Understanding of value drivers and potential risks for both Brook field and Asciano Assessment of fair value for Asciano and use of valuation methodologies, including: DCF valuation (including WACC build-up) – assumptions – reasonableness of projections – – justifications methodology explained – other valuation methods – – justification of multiples selected for trading comparables and precedent transactions Demonstrating an understanding of funding structures, its influence on cost of capital and relationship with valuation Understanding of the impact on each stakeholder in the transaction Assessment of the merits of different forms of consideration and its influence on the final offer price Analysis of approach strategy method of approach – initial and subsequent offers – likely response to the approach – Understanding of other issues surrounding the transaction, including but not limited to regulatory issues, transitional issues and issues with possible interlopers Ability to make and justify a final recommendation Question and answer questions correctly answered – thorough understanding of all case study content shown by all team members – concepts explained clearly – speed and clarity of thought – Presentation clear and compelling delivery and appropriate presentation style – effective use of PowerPoint – conciseness – clarity and conviction about the final recommendation –
Other information i nformation
Australian and American dollars are used throughout the case study as labelled All information provided in this presentation is derived from publicly available sources
3
Sector overview Introduction The transport value chain can be broken into three distinct categories:
Export market: whereby freight is transported from its production facility to a port and loaded aboard a ship
Import market: whereby freight is offloaded fr om a ship and transported to a war ehouse
Domestic: whereby freight is transported from a production facility to a warehouse
Set out below is a diagram illustrating the value chain described above:
Export / import market
Production
Road Freight
IM Terminal
Rail Freight
Port and Stevedoring
Rail Freight
IM Terminal
Road Freight
Port and Stevedoring
Warehouse
Domestic market
Production
Road Freight
IM Terminal
Rail Freight
IM Terminal
Road Freight
Warehouse
The mode of transportation varies, depending on the nature of the freight being carried:
transportat ion of freight that has been packed into a shipping container Intermodal transportation: comprises the transportation
Bulk transportation: comprises the transportation of bulk commodities such as coal, iron ore, grain, petroleum and other liquids, timber and automobiles
Companies operating in the transportation sector aim to move freight from point A to point B in the most cost efficient manner possible. The type of freight and the distance it is being transported dictates the mode of transport that will be most efficient. Thus, the efficiencies of containerisation have led to it becoming the predominant form of sea freight, comprising over 90% of non bulk cargo shipments (and an increasing pre sence in the bulk market). However, some goods are not able to be efficiently packed into a container, and hence, require bulk transportation.
4
Sector overview Rail industry Overview Rail makes up a key component of the transportation value chain. Rail freight accounts for the greatest proportion of domestic Australian freight volumes (48%), alongside road (35%) and coastal sea fre ight (17%). Only a very small proport ion (less than 0.01%) of freight is transported by air domestically.
The rail network comprises both publically and privately owned tracks whereby private owners are typically infrastructure funds. Train lines span across the continent, linking capital cities and branching out into regional net works in each state. The rail industry can be divided into two distinct segments:
Below Rail: relates to the ownership of the physical r ail tracks. Rail operators pay fees to use these tracks. The stable and certain cash flows connected with these fees, in conjunction with capital intensity associated with Below Rail, make it a 'true' infrastructure asset Above Rail: relates to the rail operators that control the locomotives that run on top of tracks. As mentioned above, these rail operators pay fees to utilise t he rail networks, but earn revenue by pr oviding transportation services to customers. Above Rail operators are more exposed to volume and competitive risks than their Below Rail counterparts, however, these businesses still exhibit 'infrastructure type' qualities because of their defensive earnings stream.
The economies of scale that rail exhibits means it has a competitive advantage over other methods of freight transport t ransport in moving large volumes cost effectively over medium to long distances. Consequently, rail lends itself to being appropriate for the transportation of bulk freight. Approximately 90% of freight carried by rail in Australia is bulk freight, with the remaining 10% being intermodal freight.
Bulk freight: –
includes bulk mineral commodities hauled from mines to export terminals (e.g. coal, iron ore, copper, bauxite, lead, zinc and nickel), agricultural commodities (e.g. grain, sugar) and liquid commodities (e.g. petroleum)
–
is characterised by large tonnages that require specialised loading and storage facilities as well as rolling stock tailored to each type of freight
–
is typically transported directly by rail from producer to port
Intermodal freight: –
comprises goods which must be packaged onto pallets or into containers to be transported tran sported
–
typically comprises multiple steps in the transportation chain. For example, a container may be transported from a ship to a train using a truck
5
Sector overview Rail industry Competitive dynamic There are two sources of competitive tension facing rail operators:
Competition between rail operators: –
–
Pacific National and Aurizon are the largest providers of bulk freight services in Australia, with both providing coal haulage in Queensland and NSW. In other bulk freight services, Pa cific National operates predominantly in NSW and Victoria, with Aurizon operating predominantly in Queensland. Genesee & Wyoming is the major bulk freight operator in South Australia Pacific National is the largest provider of intermodal rail freight services in Australia, operating in both the East-West Corridor and the North-South Corridor
Competition between rail and other forms of freight transportation: –
freight can also be carried by other forms of transportation such as trains and planes. This generates external competitive tensions
–
road freight is innately more flexible and well suited to the transportation of perishable goods and commodities requiring door-to-door delivery
–
rail, in contrast, is relatively more competitive in bulk transport and on longer routes, as large fixed costs (eg. terminals, rolling stocks etc.) are spread over longer distances and travel times
–
only approximately 10% of total tota l freight (being the share of intermodal freight) would be considered contestable from a competitive perspective
Industry drivers
The two key drivers of demand for rail freight services going forward are: –
global demand for bulk commodities (in particular coal and iron ore)
–
Australian economic activity, particularly in the manufacturing and construction sectors
Global imports of coal peaked in 2012 as demand, par ticularly from India and China, increased to meet growth in power generation and steel production in these countries. Post 2012, growth has been more subdued (at around 3.0 – 3.5% per annum) Increasing volatility in commodity prices and oil prices present near-term business risks
Historical performance performance of the domestic rail sector 8,500 7,933
8,000 ) m $ A ( e u n e v e R
7,500
7,917
7,895
2014
2015
7,249
7,000 6,500
8,069
6,599
6,693
2009
2010
6,069
6,000 5,500 5,000 2008 Source:
2011
2012
2013
IBISWorld
6
Sector overview Terminal and Port Services industry i ndustry Overview Terminal and Port Services operators conduct stevedoring, which is a key part of the transport chain. Conventional stevedoring involves the loading and unloading of ships using heavy-machinery such as cranes and hoppers. These services are provided by specialist firms which own the cargo-handling equipment and lease terminal space from the port authorities. Terminal lease arrangements are exclusive and reasonably long term, usually between 20 – 40 years for container terminals. te rminals.
Port ownership and operational structure In Australia major ports were historically owned by State and Federal Governments. Recently, however, a number of the major ports have been privatised. Under the privatisation model, the government sells a long ter m lease (usually 50 or 99 years) over the port. In Australia, these leases have been acquired by consortia of infrastructure investment funds. In turn, these “owners” lease out facilities to independent operators of the container terminal who conduct t he stevedoring (loading, unloading, storage, etc.) and contract with the shipping companies. There are generally two or more stevedoring operators at any one port. In this respect, the port “owners” effectively operate as landlords of specialised industrial property –
unlike the port "owners", Terminal and Port Services companies operating in the stevedoring industry are exposed t o volume and competition risks. However, these businesses typically have contracts with shipping companies that have a duration of over three years. In addition, there are relatively few national operators. The combination of these two factors, along with a relatively stable demand profile for the import and export of freight, make the earnings of Terminal and Port Services businesses stable and defensive in nature
Types of ports There are two types of ports, both of which, require various stevedoring services due to the nature of freight being handled:
Container ports: –
facilitate both the loading and unloading of conta iner ships and the storage and unpacking of shipping containers
–
the nature of their operations means that they require large areas of land adjacent to the wharf areas for the temporary storage of containers
–
the capital requirements, regulatory issues (particularly environmental) and limited land availability mean that there is typically only one container port in each major city
Bulk ports: –
facilitate the loading and unloading of bulk commodities including metals, minerals, building products, agricultural products, livestock and energy products onto ships –
–
for example BHP would use a bulk port in regional WA for the export of its iron ore, which requires quite different infrastructure and services to a container being unloaded at the Port of Melbourne
characterised by a high number of ports, (predominantly located in remote areas), servicing a limited number of very large shipping companies
7
Sector overview Terminal and Port Services industry i ndustry
Terminal and Port Services
Stevedoring and logistical services at Australia's major ports
Container
Operational services related to shipping container movement Comprises Asciano's Terminal & Logistics business
Bulk
Operational services related to the shipping of bulk freight Comprises Asciano's Bulk & Automotive Port Services ("BAPS")
Container stevedoring Overview
These businesses offer a range of integrated services covering the transport supply chain, including t he transport of containers to and from ports, t he operation of container parks, customs and quarantine services, warehousing and freight forwarding for rural commodities A recent decline in container volume growth, combined with significant capacity expansions that have occurred in Brisbane and Sydney and which are planned for Melbourne, mean that there is now substantial spare capacity across the east coast ports
There are more than 15 ports across Australia capable of handing containers, but the vast majority of traffic is directed through the five major ports detailed below:
City
Location
Owner / leaseholder
Brisbane
Fisherman Islands
Port of Brisbane Limited/Q Port Holdings
Sydney
Port Botany
NSW Ports
Melbourne
Port Melbourne
Port of Melbourne Corporation
Adelaide
Pelican Point (Outer Harbour)
Flinders Ports
Perth
Fremantle (Inner Harbour)
Fremantle Ports
8
Sector overview Container stevedoring Competition
Competition in the industry is influenced by industrial relations management, price, efficiency (in terms of turnaround times), service levels, reliability and re gional and global facilities
Main competitors include: Patrick T&L, DP World Australia Limited ("DP World") and Hutchinson Ports Australia Limited
Stevedoring charges at container ports are not regulated, however, the ACCC has the authority to monitor prices
The combination of multiple stevedoring businesses operating a t any one port and the threat thr eat of new entrants means the industry is relatively competitive
Industry drivers
Stevedoring operator revenues are primarily generated from payments per "lift" –
Australian import volumes are the primary driver of container movements through ports. Import volumes are a function of many factors related to economic activity
In recent years operators have made significant investments to automate their operations in an effort to reduce costs, improve safety, boost productivity and mitigate the risk of business disruption from industrial action –
the replacement of unionised dockworkers with rob ots such as automated straddles and other driverless machines is expected to benefit industry margins in the medium term
Australian container volume growth YoY 15%
e t a r h t w o r g c i f f a r t r e n i a t n o C
11% 10% 9% 8% 7% 6% 5% 4% 3% 2% 1%
2001 Source:
2002
2003
200 4
2005
2006
2007
(3%) 2008
2009
2010
2011
2012
2013
World Bank
9
Sector overview Bulk stevedoring Overview
These businesses are engaged in the loading and unloading of non containerised cargo from ships at more than 100 ports throughout Australia (typically located in regional ar eas) –
the stevedoring operators will also typically of fer a range of associated logistics services (interfacing with freight forwarders and beneficial freight owners) and transportation services
Focussed on “dry” and “wet” bulk freight, comprising a range of commodities including: metals and minerals (eg. iron ore, coal, mineral sands etc.), petroleum, gas and other energy products, liquid and dry chemicals (eg. fertilisers), agricultural products (eg. grains), edible oils, building products (eg. cement , sands etc.) and forestry products pro ducts (logs, woodchips etc.)
Competition
The four largest participants account for over 80% of industry revenue: Asciano (c.36%), DP World (c.26%), Qube Holdings (16%) and Flinders Port Holdings (c.4%) –
the industry is characterised by a high mar ket share concentration, with a fr agmented tail end comprising many small regional players
Ports of a reasonable size will typically be serviced by at least two competing stevedoring operators High capital intensity and exclusive long-term leasing arrangements with Australian port authorities r epresent significant barriers to entry for new participants to the industry
Industry drivers Key growth drivers in the near-term include:
Real GDP growth in Australia and globally
Australian commodity export volumes, particularly coal and iron ore
Cargo volume growth -
driven by growth in the international cargo trade, specifically relating to the impacts of recent free trade agreements
Increased capacity and scale -
port operators have recently been investing in expanding port facilities, with new terminals opening in Brisbane, Sydney and Melbourne
Historical performance of the domestic rail sector 2,100 2,000 1,902 ) m $ A ( e u n e v e R
1,900
2,044
2014
2 01 5
1,937
1,855
1,800 1,700
2,031
1,780
1,766
2009
2010
1,630
1,600 1,500 2008 Source:
2011
2012
2013
IBISWorld
10
Asciano overview Asciano is Australia’s only integrated rail, ports, stevedoring and landside logistics business Asciano business overview Asciano is the largest national rail freight and diversified ports operator in Australia. Asciano operates in all major segments of the import/export market and domestic supply chains, providing a diverse freight mix service offering. Asciano continues to pursue opportunities to provide integrated supply chain infrastructure solutions, leveraging the port and rail capabilities of the Group. Asciano's operations can be divided into two broad groups: rail and ports. The rail businesses operate primarily under t he "Pacific National" brand, which comprises its coal haulage, intermodal and bulk rail services. The ports businesses trade under the "Patrick" brand and includes container stevedoring as well as associated landside logistics, bulk ports management and automotive stevedoring. Asciano's businesses are market leaders, operating in highly concentrated sectors that require significant capital investment to enter. Asciano's strategic objective is to be Australia's leading provider of critical logistics services across essential infrastructure based supply chains.
1
Rail
Ports
National intermodal •
National intermodal, comprised of interstate container and break bulk freight and hook and pull services
Bulk haulage •
Bulk rail haulage provider including coal, grain, petroleum and other liquids, construction materials, and other bulks
2 •
Terminals & Logistics
National container terminal operator providing stevedoring services combined with an integrated logistics network
3 •
BAPS
Systems involved in the stevedoring services.
Asciano has three key business divisions:
1
Pacific National which conducts two primary business operations
bulk haulage
national intermodal freight haulage
2
Patrick Terminals & Logistics involving the stevedoring of and land-side transport of international containers; and
3
Patrick Bulk & Automotive Port Services ("BAPS") providing stevedoring of automotive, bulk and general cargo
In 2011, Asciano targeted a A$150m cost take-out through its Business Improvement Program ("BIP") over five years to FY16. The cumulative benefits exceeded initial expectations an d in 2014, the target was wa s increased from A$150m to A$300m. Asciano achieved BIP savings of A$34m in FY14 and A$57m in 1 HY15, increasing cumulative benefits to A$172m. The majority of cost savings were driven by the integration of the two rail businesses to create a combined Pacific National business, with integration cost benefits expected to reach A$100m by the end of FY16.
11
Asciano overview Business
Source:
Company filings
Revenue and EBITDA split by division 1 (%) FY14
Cumulative BIP cost savings (FY12 – FY16F)
1HY15 300
300
20%
Revenue
19%
19% 62%
Actuals
18%
63%
161 200
10%
EBITDA
114
7% 20%
19% 71%
Pac Pacific ific Natio ationa nall Source: Company filings Note: 1 Excludes corporate costs and eliminations
100
73%
Term Termin inal alss & Log Logis isti tics cs
172
BAP BAPS
0
37 16 7 7 7 FY12 Corporate
88
17
17
88
81
46
33 8 31 9
12 47 9
54 13
34
FY13
FY14
1HY15
FY16F
Terminals & Logistics
BAPS
Pacific Na National
12
Asciano overview Pacific National Pacific National consists of two broad business activities: •
National Intermodal: provides interstate containerised freight services, interstate break bulk freight (containerised steel), regional freight rail services in Queensland and hook and pull services for passenger trains
w e i v r e v O
•
Bulk Haulage: provides bulk rail haulage activities including coal, other commodities, liquids, concentrate and construction materials
s c i t s i t a t s 5 1 Y H 1
largest provider of long haul intermodal rail services in Australia with a 70% market share
2nd largest coal rail haulage provider in Australia, performing over 41% export coal haulage activities from mine to port and as well as for domestic users, primarily in NSW and Qld
Total annualised contracted coal tonnage in FY16 Number of locomotives
594
Number of wagons
14,068
Total insured value of fleet Average coal contract maturity
x e p a c h t w o r G
180 mtpa
A$3.9bn 7.63 years
Equipment upgrade at intermodal rail terminals Acquisition of the final Queensland intermodal property form Toll Group Rolling stock to service expansion of the Whitehaven contract Ongoing mid-life change-out of NR class locomotive fleet
Expected A$100-120m over FY15-16 Source:
Terminals & Logistics
Bulk & Automotive Port Services
Terminals & Logistics is one of two major competitors in the Australian market with a c.50% market share (DP World being the largest competitor)
Bulk & Automotive Port Services specialises in the management of bulk ports and supporting infrastructure as well as the provision of port related logistics at over 40 sites across Australia and New Zealand.
It holds lease concessions and provides container and stevedoring services in the four largest container ports in Australia:
East Swanson Dock (Melbourne)
Port Botany (Sydney)
Fisherman Islands (Brisbane)
Fremantle (Western Australia).
The division also provides an integrated logistics service that provides the interface between the shipping port and the beneficial freight owner in a joint venture with ACFS Port Logistics Pty Ltd
It also operates an integrated service for the transportation, processing and storage of motor vehicles from the port to the beneficial freight owner.
Joint ventures:
Container Terminal
Lease Term
BAPS' significant Gorgon contract is nearing end
Port of Geelong Unit Trust – Asciano (50%) and Deutsche RREEF (50%) Australian Amalgamated Terminals – Asciano (50%) and Qube (50%) Albany Bulk Handling – Asciano (50%) and Itochu (50%) Car Compounds Australia – Asciano (50%) and Mitsui O.S.K. lines (50%)
Quay line / berths
Operational sites Fleet
820 trucks, trailers, autocontainers and cranes
Port Botany
2043
1,000m / 3
East Swanson Dock
2034
885m / 3
Ownership interest
Fisherman Islands
2045
922m / 3
Patrick Ports & Stevedoring
Fremantle
2017
766m / 2
Patrick Autocare
Increase levels of automation Redevelopment of Port Botany
Expected A$45-55m in FY15
> 40 across ANZ
100% 80% (JV with NYK line)
Development of a new PDI facility at Webb Dock New equipment in forestry services business for C3 Acquisition of Patrick Marine Facility in Dampier
Expected A$300-350m over FY15-17
Company filings 13
Asciano overview Pacific National ) % ( n i g r a m & ) m $ A ( A T I B E Source:
30.4%
28.5%
28.0%
Terminals & Logistics 30.0%
29.9%
28.6%
26.8%
Bulk & Automotive Port Services
26.7% 11.8%
554
643
FY11A
FY12A
724
FY13A
746
FY14A
209
FY11A
224
FY12A
196
FY13A
13.4%
200
FY14A
56
66
FY11A
FY12A
12.9%
88
FY13A
13.4%
106
FY14A
Company filings
Revenue drivers FY12A
FY13A
FY14A LTM Dec-14
19,988
24,039
29,227
29,932
4%
20%
22%
10%
5,646
6,010
5,115
5,034
32%
17%
(14%)
(6%)
120
139
159
164
(2%)
16%
15%
10%
22,975
22,657
21,492
21,291
(38%)
(1%)
(5%)
(5%)
Intermodal TEUs ('000)
694
674
811
778
growth
3%
(3%)
20%
3%
2,674
2,822
2,924
2,946
1%
6%
4%
nm
1,967
1,939
2,014
2,059
12%
(1%)
4%
6%
2,912
2,909
2,981
3,036
14%
(0%)
3%
5%
944
1,056
1,037
1,017
(3%)
12%
(2%)
(6%)
11,811
18,642
22,715
19,104
(1%)
58%
22%
(14%)
Vessels Stevedored ('000)
1,603
2,244
2,120
2,691
growth
(17%)
40%
(6%)
16%
Pacific National Coal NTKs (m) growth
Other Bulk Rail NTK (m) growth
Coal Tonnes (m) growth
Intermodal NTKs (m) growth
Steel tonnes ('000) growth
Terminals & Logistics Container Lifts ('000) growth
TEUs ('000) growth
Bulk & Automotive Port Services Vehicle Movements ('000) growth
Vehicle Storage Days ('000) growth
Source:
Company filings 14
Asciano overview Asciano's corporate history Asciano was first listed on the ASX on 6 June 2007, after Pacific National rail freight businesses, along with the stevedoring and ports businesses of Patrick Corporation were demerged from Toll Holdings. Asciano has a long history:
Pacific National can trace its operational history to 1855 when the NSW Government Railways commenced operations
Patrick ports business dates back to Patrick Steamship Company, which was formed in 1919
1855 NSW Government Railways commences operations 1912 Commonwealth Railways formed 1975 Australian National Railways ("ANR") formed to take over the assets and operations of Commonwealth Railways 1980 NSW State Rail Authority ("NSWSRA") established 1992 National Rail formed by Commonwealth Government to take over the interstate assets & operaitons of ANR 1993 Patrick Corporation acquires 100% of Patrick Stevedoring – merged from Strang Patrick Stevedoring and National Terminals. National Rail acquires the interstate rail freight assets and interest of VicRail, WestRail and Qld Rail 1996 FreightCorp formed to take over NSWSRA's operations. Patrick Corporation acquires Patrick Autocare 1997 Toll acquires operating rights to Port of Geelong 2001 Toll acquires Strang Stevedoring Source:
2002 Pacific National (JV between Toll and Patrick Corporation) acquires National Rail and FreightCorp. Toll acquires BHP Stevedoring. AAT joint venture formed 2004 Toll acquires Western Stevedores Group. Pacific National acquires Freight Australia. C3 JV formed 2006 Toll acquires Patrick Corporation, effectively taking 100% control of Pacific national in the process 2007 Asciano demerged from Toll, combining the Pacific National, Patrick and Toll Ports businesses. Ordinary shares in Asciano Limited and units in Asciano Finance Trust were stapled to one another and quoted as a single security on the ASX 2008 Asciano signs coal haulage contract with Rio Tinto and Xstrata Coal 2009 Asciano commences coal haulage operations in Queensland 2010 Asciano simplified its corporate structure from a stapled security structure into a single holding company structure that trades on the ASX under the code "AIO" 2011 Asciano consolidated its share capital through the conversion of every three ordinary shares for one ordinary share in Asciano Limited reudcing the number of shares on issue from 2,926m to 975m 2012 Asciano announced a A$348m redevelopment program and expansion of Port Botany container terminal and acquires the remaining 50% stake in C3 Limited 2013 Asciano entered into a legally binding offer to purchase 100% of the shares in Mountain Industries and the freehold properties currently utilised by Mountain for a total cash consideration of A$93m 2014 Asciano merged Pacific National Rail and Pacific National Coal into one division
Company filings
15
Asciano overview Income statement A$m; Jun y/e
FY12A
FY13A
FY14A LTM Dec-14
Terminals & Logistics
781
732
749
726
Bulk and Auto Port Services
493
681
793
770
2,257
2,378
2,489
2,471
(74)
(62)
(36)
(31)
Total revenue
3,457
3,728
3,995
3,935
Rail access charges1
(243)
(175)
(204)
(185)
Total revenue (net of rail access charges)
3,214
3,553
3,791
3,750
224
196
200
202
66
88
106
73
643
724
746
799
(25)
(7)
(0)
4
908
1,001
1,052
1,077
(257)
(277)
(301)
(308)
175
150
150
153
66
90
91
55
465
534
542
588
(56)
(58)
(31)
(26)
Total EBITA
651
716
751
770
Amortisation2
(34)
(30)
(31)
(31)
170
150
150
153
66
89
90
54
436
505
512
558
(56)
(58)
(31)
(26)
617
686
720
739
(220)
(200)
(225)
(227)
396
486
495
512
(144)
(142)
(143)
(150)
(2)
(2)
(3)
(1)
NPAT (underlying)
250
342
350
361
NPAT (statutory)
241
334
254
257
Revenue
Pacific National Corporate / Other
EBITDA Terminals & Logistics Bulk and Auto Port Services Pacific National Corporate / Other
Total EBITDA Depreciation
EBITA Terminals & Logistics Bulk and Auto Port Services Pacific National Corporate / Other
EBIT Terminals & Logistics Bulk and Auto Port Services Pacific National Corporate / Other
Total EBIT Net interest expense
PBT Income tax expense Minority interests
Source: Company filings Notes: 1 Rail access charges related to the cost of accessing the rail network which is passed directly through to bulk customers 2 Relates to amortisation of customer contracts and legacy acquisiti on amortisation
16
Asciano overview Balance sheet A$m; Jun y/e
FY12A
FY13A
FY14A
31-Dec-14
Cash and cash equivalents
149
30
299
184
Trade receivables
375
392
429
434
Prepayments
24
31
26
36
Inventories
24
29
33
38
3
13
4
79
576
495
792
771
3,582
3,926
4,374
4,405
Inventories
33
41
32
29
Receivables
68
55
58
55
Associates
35
28
31
30
129
231
166
403
2,750
2,794
2,810
2,795
98
67
109
104
9
6
4
2
Total non-current assets
6,705
7,148
7,584
7,824
Total assets
7,280
7,643
8,375
8,595
366
394
464
422
-
-
1
490
105
52
10
15
69
29
61
29
Provisions
200
236
276
257
Total current liabilities
740
711
813
1,213
2,858
3,071
3,370
3,290
119
19
58
16
89
93
83
85
126
114
136
157
Total non-current liabilities
3,193
3,298
3,647
3,549
Total liabilities
3,933
4,008
4,460
4,761
3,335
3,620
3,699
3,816
13
15
17
18
3,347
3,635
3,716
3,833
Current assets
Other current assets
Total current assets Non-current assets Property, plant and equipment
Financial derivative assets Intangibles Deferred tax Other non-current assets
Current liabilities Trade and other payables Short-term debt Tax liabilities Financial derivative liabilities
Non-current liabilities Long-term debt Financial derivative liabilities Provisions Other non-current liabilities
Equity Ordinary equity Minorities
Total equity Source:
Company filings
17
Asciano overview Cash Flow Statement A$m; Jun y/e
FY12A
FY13A
FY14A
LTM Dec-14
EBITDA
908
1,001
1,052
1,077
Tax paid
(46)
(170)
(157)
(140)
(234)
(220)
(198)
(215)
18
19
12
12
Other operating cash flows
(38)
(31)
(102)
(61)
Operating cash flow
608
598
607
673
Growth capex
(124)
(122)
(136)
(98)
Maintenance capex
(695)
(464)
(483)
(459)
29
(51)
(85)
2
Investing cash flow
(790)
(637)
(704)
(555)
FCF before financing
(182)
(40)
(97)
118
(64)
(90)
(117)
(139)
(3)
0
1
(3)
0
10
351
135
(66)
(80)
235
(7)
(249)
(120)
138
110
Net interest expense Dividends received from associates
Acquisitions / disposals
Dividends paid Changes in equity Changes in debt
Financing cash flow Net increase/(decrease) in cash and cash equivalents
Shareholding Shareholding Information •
As at 31 March 2015, Asciano had 975,385,664 ordinary shares outstanding
Top five shareholders
Ownership (%)
Colonial First State Asset Management
10.4
BT Investment Management
6.7
UBS Group AG
3.2
MLC Investments
3.5
Antares Capital Partners
1.8
Top five shareholders total Share-based payments
25.6 Grant date
Expiry / Vesting date
Exercise price (A$)
Closing balance
Option (Tranche B)
15-Jul-10
30-Jun-15
5.01
894,948
Option (Tranche B)
17-Dec-10
30-Jun-15
5.01
303,890
Option (Tranche B)
10-Nov-11
30-Jun-15
5.04
516,186
Short-term incentive plan
20-Aug-13
01-Sep-15
na
91,931
Short-term incentive plan
03-Oct-13
01-Sep-15
na
185,003
Long-term incentive plan
18-Feb-14
30-Jun-16
na
4,351
Long-term incentive plan
12-Nov-13
30-Jun-16
na
236,674
Long-term incentive plan Long-term incentive plan Long-term incentive plan
20-Aug-13 09-Jan-13 15-Nov-12
30-Jun-16 30-Jun-15 30-Jun-15
na na na
303,293 13,394 257,767
Long-term incentive plan
03-Nov-12
30-Jun-15
na
40,434
Long-term incentive plan
03-Oct-12
30-Jun-15
na
254,902
Source:
Company filings
18
Brookfield overview Brookfield owns and operates a globally diversified portfolio of high quality infrastructure assets across the utilities, transport, energy and communications sectors Brookfield business overview Brookfield is a listed infrastructure fund specialising in predominately debt funded investments in utilities, t ransport, energy and communications infrastructure businesses. businesses. Brookfield is listed on the New York Stock Exchange Exc hange (NYSE: BIP) and the Toronto Stock Exchange (TSE: BIP.UN), with a market capitalisation of c.A$13bn. Brookfield has an investment grade S&P credit rating of BBB+. Brookfield was formed through a spinoff by Brookfield Asset Management, which remains the group's largest shareholder with a c.30% stake. The remainder r emainder of the register broadly comprises of US institutional funds. Fund mandate
Brookfield is a financial acquirer with w ith a diversified investment portfolio of infrastructure assets in North and South America, Australia and Europe Brookfield focuses on investments in: – high quality and long-life assets with high margins that generate stable cash flows and require relatively low maintenance capital expenditure – diversified assets that have significant barriers to entry with contracted and escalating revenues Brookfield’s objective is to generate attractive long-term equity returns and sustainable distribution growth –
Brookfield has a preference to fund acquisitions with debt to achieve such returns
An integral part of Brookfield's strategy is to co-invest with other institutional investors, while ensuring the group has sufficient influence and control to deploy their expertise to enhance operational efficiencies
Historical performance of distribution and FFO 1 per unit2 The fund has historically outperformed its investment objectives, as set out below:
2.41
2.41
1.79 1.03
1.10
1.06
2009
2010
1.32
201 1 FFO per per uni unitt
Source:
3.60
3.45
3.30
1.72
1.50
2012
2013
1.92
2014
2.12
2015
Dist Distri ribu buti tion on per unit nit
Company filings
Notes: 1 FFO relates to Funds From Operations, which Brookfield defines as net income excluding depreciation and amortisation, deferre d income taxes, breakage and transaction costs, non-cash valuation gains or losses and other items 2 A unit can be considered to be equivalent to a share
19
Brookfield overview Overview of operations by geography
Owns ‘below rail’ infrastructure assets in South West WA, which is the only freight rail network in the southwest region of Western Australia providing access to the region’s five government owned ports (minerals, grain, interstate interstate intermodal traffic)
FY14 revenue by geography diversified geographically United Kingdom 32%
North America 10%
Australia 42%
Brookfield has a strong global terminals business consisting of Australian regulated (see below) and North American container terminal businesses businesses (port operations comprising of gateway container terminals in Los Angeles and Oakland under under long-term leases)
Natural gas distribution and retail business, supplying residential, commercial and industrial customers Supply natural gas and/or thermal energy as well as water distribution and sewage services to residential and commercial customers
Port facility in Queensland exporting metallurgical / thermal coal ac counting for c.20% of global metallurgical and c.7% of global seaborne coal exports One of the only cost efficient options to export quality coal from Bowen Basin Take or pay arrangements to 2019
FY14 revenue by segment diversified operationally Energy 14%
Utilities 32%
Transport 54%
South America 16% Source:
Company filings 20
Brookfield overview Unit price has performed strongly over the last five years
60.00 50.00 t i 40.00 n u / $ A 30.00
20.00 10.00 Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Brookfield liquidity vs Asciano ADTV1 (m) 4.483
4.076 3.663
0.307
0.345
LTM ADTV (m)
LTM ADTV (m)
3 month ADTV (m)
BIP² Interests quo quoted on the NYSE
0.350 3 month ADTV (m)
6 month ADTV (m)
BIP² Interests quoted on the TSX
6 month ADTV (m)
Asciano Shares
Key operating metrics (US$m)
FY12
FY13
FY14
Revenue
1,524
1,826
1,924
EBITDA
663
893
963
FFO / unit (US$/unit)
2.41
3.30
3.45
Distribution / unit (US$/unit)
1.50
1.72
1.92
Notes: 1 ADTV is the Average Daily Trading Trading Volume, which acts as a proxy proxy for the liquidity liquidity of a stock 2 Where BIP is related to Brookfield
21
Brookfield overview Utilities Utilities
n o i t p i r c s e D
s e l i f o r p t e s s A
Owns and operates regulated assets and contracted businesses Returns based on base rates which are typically determined for prescribed periods of time and are subject to customary reviews
Regulated terminal (Australia): one of the world's largest coal export terminals in Queensland Electricity transmission (South / North America): 10,800km of transmission lines in North and South America
Transport
Source:
Stable revenues that are contracted and supported by customer relationships
Rail (Australia, South America): sole provider of Below Rail networks in South West WA with c.5,100km of track
Toll roads (South America): c.3,300km of motorways in Brazil and Chile
Regulated distribution (Europe): c.2.4m electricity & natural gas connections
Combined US$4.8bn in assets (31 Dec 2014)
s t h g i l h g i H
Open access systems that provide transportation, storage and handling services for freight, bulk commodities and passengers for which Brookfield is paid an access fee
Stable revenues and free cash flow generation supported by long-term contracts Competitive advantage owing to regulatory frameworks and economies of scale
Ports (Europe, South America): 30 terminals in North America, UK and across Europe
Combined US$5.0bn in assets (31 Dec 2014)
High barriers to entry with few substitutes Diversification mitigates impact of fluctuations in demand from any one sector or customer c.80% of EBITDA from contracted revenues
Communications Infrastructure
Energy Provides transportation, storage and distribution services Comprised of businesses that are subject to limited or no regulation
Revenues are typically contracted with various durations
Transmission, distribution and storage (North America, Europe): 14,800km of transmission pipelines, >40,000 gas distribution customers in the UK, 370bn cubic feet of natural gas storage in North America
District energy (North America, Australia): cooling and heating plants in North America, heating, cooling and distributed water and sewage services in Australia
Provides essential services and critical infrastructure to the media broadcasting and telecom sectors in France Customers pay a combination of upfront and recurring fees to lease space on BIP towers to host their equipment
Tower infrastructure operations (Europe): c.7,000 multi-purpose towers and active rooftop sites and c.5,000km of fibre backbone located in France that generate stable, inflation linked cash flows underpinned by long-term contracts (typically 10-20 years in telecom and 5 years in broadcasting)
Combined US$1.8bn in assets (31 Dec 2014)
High barriers to entry with few substitutes Revenues generated under long-term contracts with varying durations
Stable, inflation-linked cash flows underpinned by longterm contracts with tariff escalations Strong free cash flow generation Large, prominent customers
Company filings
22
Brookfield overview Since its inception in May 2007, Brookfield has expanded expanded into multiple high quality infrastructure assets Jan-08 Brookfield partnership was spun off from Brookfield Asset Management and began trading on the NYSE under the ticker symbol “BIP” Sep-09 Brookfield and its partner Isolux’s joint venture company Wind Energy Texas Transmission LLC began trading on the TSX under the ticker symbol “BIP.UN” Dec-10 Brookfield increased its ownership of Prime from 40–100% through a Merger. They had previously invested in Prime in November 2009 Dec-11 Brookfield purchased an ownership stake in two related Chilean toll road assets comprised of a 33 kilometre toll road and tunnel that form part of a key ring road in the transportation network of Santiago, Chile
Oct-12 Brookfield acquired Brookfield Asset Management's interest in its Chilean transmission system and completed the acquisition of an additional interest in their Chilean toll road Nov-12 Brookfield completed the merger of its existing UK reg ulated distribution business with a UK regulated distribution business which they acquired in the third quarter of 2012
Mar-14 Brookfield acquired, alongside institutional investors, an approximate 50% equity stake in Mitsui O.S.K. Lines, Ltd. container terminals in Los Angeles and Oakland Aug-14 Brookfield acquired, alongside institutional investors, two district energy businesses serving Chicago and Las Vegas. They also together acquired a c.11% interest in VLI, one of Brazi l’s largest rail and port logistics businesses
Dec-14 Brookfield acquired, alongside institutional investors, a 50% interest in T res Palacios Gas Storage in Texas and 100% stake in Lodi Gas Storage in California Mar-15 Brookfield, through a sponsored fund, acquired a 21% interest in TDF, a European telecommunications infrastructure operation Jun-15 Brookfield, along with institutional partners, signed definitive agreements to acquire all of the outstanding common units of Niska Gas Storage Partners LLC
Source:
Company filings
23
Brookfield overview Consolidated Consolidated balance sheet US$m Current assets Cash and cash equivalents Accounts receivable and other Other current assets Total current assets Non-current assets Property, plant and equipment Intangible assets Other non-current assets Total non-current assets Total assets Current liabilities Accounts payable and other Short-term debt Other current liabilities Total current liabilities Non-current liabilities Long-term debt Other non-current liabilities Total non-current liabilities Total liabilities Equity Attributed to Brookfield's shareholders Non-controlling interests Total partnership capital Total liabilities and partnership capital Source:
31-Mar-15 189 299 1,072 1,560 8,084 3,575 3,276 14,935 16,495 532 90 199 821 7,322 2,030 9,352 10,173 3,557 2,765 6,322 16,495
Company filings
24
Asciano share price data Week ending
Close price (A$/share)1
Cum Volume2
Cum Value (A$)3
5.17 5.21 5.22 5.39 5.51 5.45 5.33 5.38 5.73 5.68 5.81 5.74 5.72 5.53 5.46 5.22 5.22 5.46 5.67 5.69 5.59 5.33 5.32 5.23 5.12 5.45 5.47 5.50 5.52 5.22 5.44 5.46 5.54 5.79 5.78 5.86 5.72 5.84 5.96 5.87 5.78 5.88 5.84 6.03 6.02 5.79 5.93 6.06 6.12 5.91 5.96 6.14 5.90
24,058,312 18,226,546 12,372,723 19,119,542 29,474,654 27,707,500 17,556,944 12,031,128 32,195,074 39,236,675 22,640,180 16,150,892 19,441,500 22,653,787 21,840,094 19,884,848 18,270,695 20,161,479 14,345,940 13,410,612 24,705,910 22,556,415 20,273,773 20,630,920 20,624,669 27,533,428 7,012,709 4,458,022 14,793,114 16,054,347 11,623,987 14,372,129 23,244,235 20,568,768 36,742,340 17,853,397 28,514,314 19,944,348 17,761,909 20,606,838 12,026,245 10,843,750 10,693,291 22,057,062 13,706,549 17,447,974 10,753,990 17,790,115 16,904,238 18,254,853 10,487,764 18,604,668 15,182,693
122,412,129 93,997,470 64,359,237 101,391,688 160,982,495 151,542,301 94,391,642 64,561,817 178,738,434 224,023,549 130,991,615 93,601,354 111,245,519 127,135,130 119,531,704 106,131,849 94,997,688 109,186,768 80,478,103 76,741,453 139,320,728 122,874,900 109,871,617 108,053,265 105,537,626 144,080,092 38,292,206 24,486,862 80,397,477 85,454,234 61,908,712 78,577,044 127,146,135 116,247,809 214,116,477 104,866,745 164,205,567 114,269,048 104,733,974 121,374,489 69,519,796 63,324,460 62,883,213 131,802,249 82,135,693 102,881,190 62,884,696 105,229,497 103,565,669 108,524,714 62,220,258 112,010,024 91,741,878
27-Jun-14 04-Jul-14 11-Jul-14 18-Jul-14 25-Jul-14 01-Aug-14 08-Aug-14 15-Aug-14 22-Aug-14 29-Aug-14 05-Sep-14 12-Sep-14 19-Sep-14 26-Sep-14 03-Oct-14 10-Oct-14 17-Oct-14 24-Oct-14 31-Oct-14 07-Nov-14 14-Nov-14 21-Nov-14 28-Nov-14 05-Dec-14 12-Dec-14 19-Dec-14 26-Dec-14 02-Jan-15 09-Jan-15 16-Jan-15 23-Jan-15 30-Jan-15 06-Feb-15 13-Feb-15 20-Feb-15 27-Feb-15 06-Mar-15 13-Mar-15 20-Mar-15 27-Mar-15 03-Apr-15 10-Apr-15 17-Apr-15 24-Apr-15 01-May-15 08-May-15 15-May-15 22-May-15 29-May-15 05-Jun-15 12-Jun-15 19-Jun-15 26-Jun-15 Source: IRESS Notes: 1 Based on ASX closing prices 2 Total volume traded on the ASX and Chi-X including off market trades 3 Total value traded on the ASX and Chi-X including off market trades
25
Brookfield share price data Week ending 27-Jun-14 04-Jul-14 11-Jul-14 18-Jul-14 25-Jul-14 01-Aug-14 08-Aug-14 15-Aug-14 22-Aug-14 29-Aug-14 05-Sep-14 12-Sep-14 19-Sep-14 26-Sep-14 03-Oct-14 10-Oct-14 17-Oct-14 24-Oct-14 31-Oct-14 07-Nov-14 14-Nov-14 21-Nov-14 28-Nov-14 05-Dec-14 12-Dec-14 19-Dec-14 26-Dec-14 02-Jan-15 09-Jan-15 16-Jan-15 23-Jan-15 30-Jan-15 06-Feb-15 13-Feb-15 20-Feb-15 27-Feb-15 06-Mar-15 13-Mar-15 20-Mar-15 27-Mar-15 03-Apr-15 10-Apr-15 17-Apr-15 24-Apr-15 01-May-15 08-May-15 15-May-15 22-May-15 29-May-15 05-Jun-15 12-Jun-15 19-Jun-15 26-Jun-15
Close price (A$/unit)1 44.28 43.84 43.13 43.55 44.25 42.63 43.07 44.29 44.41 45.46 45.17 44.87 44.86 44.02 42.76 43.22 43.67 45.25 46.14 46.80 46.60 47.95 48.79 51.16 49.31 48.95 51.57 52.46 52.60 52.21 54.44 54.00 57.47 59.57 57.63 58.20 55.83 55.72 57.64 58.53 59.99 58.25 57.52 57.25 56.32 56.55 55.84 57.29 56.56 56.11 56.76 57.35 59.37 Source: IRESS Notes: 1 Currency converted from US$ to A$ at close of daily spot exchange rate 2 Total volume traded on the NYSE including off market trades 3 Total value traded on the NYSE including off market trades
Cum Volume2 631,250 497,129 588,197 338,264 432,951 860,814 461,464 530,285 440,871 599,305 356,379 817,184 1,434,623 1,129,120 1,607,567 1,468,711 1,417,487 1,145,885 944,121 966,840 704,395 1,002,205 653,912 1,130,317 1,102,491 1,182,629 439,291 440,760 775,403 688,877 562,907 876,896 1,209,110 789,818 1,116,447 3,705,128 842,355 1,110,679 2,169,022 1,201,805 553,953 4,161,608 1,759,721 1,015,804 969,024 819,335 922,821 929,808 678,287 733,333 816,858 1,323,357 1,186,657
Cum Value (A$)1,3 27,627,165 22,017,230 25,567,915 14,629,557 19,025,106 37,411,939 19,616,929 23,039,695 19,537,595 27,046,010 15,980,141 37,611,438 64,517,372 50,345,767 69,682,253 63,588,843 61,022,994 51,276,773 42,949,500 44,755,214 32,958,135 47,798,256 32,008,318 57,371,767 55,285,290 58,060,102 22,090,243 22,918,908 39,955,420 36,044,322 30,325,327 47,724,233 67,944,864 46,222,642 63,946,432 215,983,437 48,459,119 62,199,672 121,848,740 70,716,550 33,134,408 242,915,706 100,845,358 58,028,753 54,751,047 45,977,357 51,412,191 53,201,197 38,824,455 41,550,811 45,998,527 75,215,729 69,908,725
26
Selected precedent transaction multiples LTM Date
Target
Acquirer
Region
Value (A$m)
EV/EBITDA
EV/EBIT
Container port operations Sep-13
NCC Group
Global Ports Investments
Europe
1,677
9.2x
10.4x
Sep-12
Global Ports Investments (37.5%)
APM Terminals
Europe
2,212
8.2x
10.4x
Jul-12
Adelaide Container Terminal (60%)
Flinders Ports
Australia
236
12.4x
27.5x
Dec-10
DP World Australia (75%)
Citi Infrastructure
Australia
1,817
12.7x
na
Bulk ports and associated services Jan-15
Integrax
Tenaga
Asia
271
14.3x
22.1x
Aug-14
Lyttelton Port (20.4%)
Christchurch City
ANZ
378
11.6x
19.2x
May-12
Port of Portland (50%)
Palisade Ports
ANZ
197
9.0x
14.1x
Mar-11
Forth Ports
Arcus Infrastructure
Global
1,020
11.2x
13.2x
Oct-10
Primorsk Trade Port
Novorossiysk
Global
2,554
19.0x
na
Rail transport Feb-15
Freightliner (94%)
Genesee & Wyoming
Europe
1,070
na
na
Nov-14
Pinsly Railroad,Westfield Mass
Genesee & Wyoming
North America
47
na
na
Jul-12
RailAmerica
Genesee & Wyoming
North America
1,940
11.7x
15.2x
Jun-10
Freightlink
Genesee & Wyoming
ANZ
334
na
na
Nov-09
Burlington Northern Santa Fe
Berkshire Hathaway
North America
47,632
9.1x
12.6x
Aug-08
Ohio Central Railroad System
Genesee & Wyoming
North America
283
na
na
Jun-08
Freightliner
Arcapita
Europe
415
5.9x
8.8x
Jun-07
English Welsh & Scottish Railway
Deutsche Bahn
Europe
709
14.0x
20.5x
May-07
Florida East Coast Industries
Fortress Investment Group
North America
4,229
33.8x
47.2x
Nov-06
RailAmerica
Fortress Investment Group
North America
1,340
12.8x
20.8x
Source:
Company filings, press releases, IRESS, S&P Capital IQ
27
Selected trading statistics ND / EBITDA EV (A$m) Container port operators
EV / EBITDA
EV / EBIT
Mkt cap. (A$m)
Jun-15F
Jun-15F
Jun-16F
Jun-15F
Jun-16F
EVE
DP World
52,041
47,808
2.5x
10.7x
9.4x
14.5x
12.5x
ICTS
8,831
6,458
2.5x
11.8x
10.5x
16.3x
14.3x
Hamburger Hafen und Logistik
2,434
1,884
0.9x
5.5x
5.1x
9.6x
8.7x
733
314
2.3x
8.9x
8.7x
17.4x
17.2x
Global Ports
3,042
1,399
3.5x
7.4x
8.4x
10.5x
12.1x
Hutchison Port Holdings
18,737
7,146
3.9x
12.0x
11.5x
19.3x
18.4x
COSCO Ports
9,182
5,321
2.6x
10.2x
9.8x
19.3x
18.3x
Average
2.6x
11.6x
11.0x
18.8x
17.7x
Median
2.5x
14.0x
12.2x
19.3x
17.1x
Eurokai
Bulk ports & associated services Diversified and bulk ports Dalian Port
3,550
682
3.9x
10.2x
9.3x
18.6x
16.1x
Xiamen International Port
2,818
554
1.1x
11.0x
9.8x
15.8x
13.8x
711
539
0.7x
7.6x
7.1x
13.9x
13.1x
2,441
2,098
2.1x
18.4x
17.2x
22.3x
20.6x
Qube
3,393
2,610
1.3x
10.6x
10.2x
16.5x
15.5x
Mainfreight
1,655
1,415
1.6x
10.7x
9.8x
13.6x
12.3x
Average
1.8x
11.7x
10.9x
17.2x
15.7x
Median
1.5x
10.8x
9.8x
17.2x
15.0x
Luka Koper dd Port of Tauranga
Freight and logistics
Rail transport Aurizon
14,403
11,247
2.1x
9.4x
8.5x
14.3x
12.7x
3,312
901
4.8x
8.9x
6.6x
20.2x
14.3x
124,106
110,083
1.0x
8.4x
7.7x
10.2x
9.3x
Canadian National
70,764
61,229
1.5x
10.5x
9.6x
12.9x
11.9x
Norfolk Southern
45,958
34,955
1.9x
8.0x
7.3x
10.3x
9.3x
CSX
55,323
43,011
1.9x
9.0x
8.4x
11.9x
11.0x
Canadian Pacific
40,818
34,343
1.9x
11.0x
10.0x
13.3x
12.1x
Genesee & Wyoming
8,378
5,323
3.2x
11.0x
10.0x
15.2x
13.8x
Average
2.3x
10.1x
8.9x
14.2x
12.4x
Median
1.9x
9.5x
8.6x
14.8x
13.0x
VTG Rail and Logistics Union Pacific
Source:
Thomson Reuters, broker reports (data as at 25 June 15)
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