>SHIPPING CORPORATION OF INDIA (MORGAN STANLEY)

F2009: In Line with Expectations

Quick Comment: SCI reported F2009 revenues of Rs 41.2 bn (up 12% YoY) vs. our estimate of Rs 41.3 bn, and EBITDA of Rs 10.9 bn (up 19% YoY) vs. our estimate of Rs 10.6 bn. Reported profits were Rs 9.4 bn (up 16% YoY while adjusted profits were Rs 9.8 bn (up 20% YoY). SCI has significant exposure to tanker rates, and we believe they were relatively stable during the first
9 months of the year compared to bulk carrier rates, which helped the company to avoid volatility in earnings.

What's new: For F4Q09, SCI reported revenues of Rs 8 bn (down 24%) and EBITDA of Rs 918 mn (down 61% YoY). EBITDA margins for F4Q09 were down 1,062 bps YoY at 11.4%. Reported profits were Rs2 bn (down 19% YoY); however, we believe adjusted profits (adjusted for forex impact) were Rs892 mn (down 64% YoY).

During the year, the company sold two vessels – a dry bulk carrier in F4Q09 and a crude oil tanker in F2Q09. It realized Rs345 mn as profit on the sale of these ships. In addition, during the year, the company is likely to have taken delivery of two container vessels and one VLCC. The company declared a dividend of Rs 6.5/share.

In our view, tanker freight rates could stabilize or improve from current levels after having been beaten down in the past few months.

To see full report: SCI