ALCN: 3Q20/21| The Ship Has Sailed

  • Rising Prices and Volumes Supported by Flourishing International Trade
  • Healthier Margins by Improved Performance and Steady Expenses
  • Strong Performance Trickled Down to a Healthy Bottom Line

Rising Prices and Volumes Supported by Flourishing International Trade

ALCN reported 3Q20/21 revenues of EGP627 million, compared to EGP549 million in 2Q20/21 and EGP567 million in 3Q19/20, implementing a QoQ rise of 14.2% and YoY rise of 10.5%. Number of containers handled reached 225 thousand containers, rising by 11.8% QoQ but falling YoY slightly by 1.2%. EGP denominated service fees witnessed a healthy incline reaching EGP2,792/container in 3Q20/21, from EGP2,733/container in 2Q20/21 and EGP2,496/container in 3Q19/20, showing a 2.2% rise QoQ and 11.8% rise YoY. USD denominated service fees witnessed a rise as well, hitting USD178/container in 3Q20/21, compared to USD174/container in 2Q20/21 and USD158/container in 3Q20/21, a 2.1% incline QoQ and 12.3% incline QoQ. The rise in revenues could clearly be backed by a rise in both prices and volumes as international trade health starts to pick up again after the halt caused by the pandemic.

As the improvement could be witnessed clearly in 3Q20/21, the nine months figures did not show similar enhancement. Revenues for 9M20/21 came in at EGP1,724 million, compared to EGP1,816 million in 9M19/20, declining by 5.1% YoY. Number of containers handled showed a decline as well by 6% YoY, reaching 627 thousand containers, after hitting 668 thousand containers in 9M19/20. EGP denominated service fees came in at EGP2,747/container, showing a 1% incline YoY. Followed by USD denominated service fees hitting USD174/container, rising by 3.5% YoY. 

Healthier Margins by Improved Performance and Steady Expenses

Gross profit for the quarter came in at EGP417 million, compared to EGP350 million in 2Q20/21, a 19.2% rise QoQ and 18.7% rise YoY. Leading to a healthy GPM of 66.5% in 3Q20/21, compared to 63.7% in 2Q20/21 and 61.9% in 3Q19/20. COGS continued to decline on the YoY basis, falling by 2.8%. However, it witnessed a rise of 5.5% QoQ.

General & Administrative expenses came in at EGP52 million in 3Q20/21, dropping by 8.4% QoQ, but inclining by 4.6% YoY, leading to a G&A/Sales of 8.3%, compared to 10.3% in 2Q20/21 and 8.8% in 3Q19/20. EBITDA witnessed a strong incline in 3Q20/21 and was able to record healthy margins, where EBITDA came in at EGP395 million, rising by 22.1% QoQ and 26.4% YoY. EBITDA margin followed the trend to reach 63% for the quarter, compared to 58.9% in 2Q20/21 and 55.1% in 3Q19/20.

Strong Performance Trickled Down to a Healthy Bottom Line

Strong performance trickled down to a healthy bottom line of EGP387 million, up by 11.4% from EGP348 million in 2Q20/21, and by 28.7% from EGP301 million in 3Q19/20. NPM hit 61.7%, compared to 63.3% in 2Q20/21 and 53% in 3Q19/20.

Net profit for 9M20/21 came in at EGP1,012 million, compared to EGP1,040 million, a decline of 2.7% leading to a NPM of 58.7%, compared to 57.3% in 9M19/20, a 1.5pps increase YoY.

Maintain Equalweight

Improvement is clearly noticeable in ALCN’s performance as the world trade and global economies pick up their strengths again, supported by rising commodities prices and vaccination rollout. The impact of completion of phase 1 of Terminal 96 deepening project (which according to management should increase the number of containers handled by 5-10% annually) will not fully materialize until a full recovery in trade activity happens. ALCN is currently trading at FY20/21e P/E of 8.4x, which is below its 5yr and 7yr averages of 9.9x and 9.4x, respectively.

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