Upgrade to Outperform. We see the recent share price pull back as a
chance to buy into a well managed company with potential to grow share off a low base.
Macquarie Private Wealth Qube Holdings
6 December 2012 2
Analysis
Fig 1
Source: Company Reports, Macquarie Research, December 2012
Qube Holdings Share price $ 1.45
Income statement June YE 2H10a 1H12a 2H12e 1H13e 2H13e FY11a FY12e FY13e FY14e FY15e
Revenues
Bulk & Ports $m 99 203 214 252 0 302 467 512 555 Logistics $m 245 232 295 296 191 477 591 650 701 Other $m 8 2 1 15 15 20 3 31 32 33 Total revenues $m 8 346 436 524 564 211 782 1,088 1,194 1,288 Revenue growth % 409.9% 204.5% 51.7% 29.2% 1645.2% 270.5% 39.1% 9.7% 7.9% EBITDA $m 17.6 0 33 85 87 80 33 172 192 208 Margin % 37.9% 4.2% 15.8% 16.1% 16.1%
Depreciation and amortisation $m - 0.1 -15 -21 -24 -26 7 36 50 58 58
EBIT
Logistics (ex-POTA) $m 24 18 28 23 41 52 61 68 Ports & Bulk (ex-POAGS) $m 20 22 29 34 42 63 63 72
Other incl. corporate $m 17.5 -12 -28 3 4 74 -40 7 9 10
Associate earnings $m 7 7 10 10 - 13 20 22 24 EBIT recurring (inc. associates) $m 17.5 39 18 71 72 74 57 142 156 173 EBIT non-recurring $m - - 47 - - - - 2 - 47 - - - Total EBIT (incl. associates) $m 17.5 - 8 18 71 72 73 10 142 156 173
EBIT margin % 2.1 0 0 0 0 35.1% 7.3% 13.1% 13.0% 13.4%
Net interest $m 0.4 -6 -6 -13 -14 -1 -12 -26 -26 -21
Pretax profit $m 18.0 -14 12 58 58 71 -2 116 130 152
Tax $m - 5.6 23 -22 -17 -17 -6 0 -35 -39 -46
Net profit after tax $m 12.3 9 - 10 41 41 66 - 1 81 91 106
Profits attr to non-controlling SHs $m - -1 0 -3 -3 -4 -1 -6 -7 -7
Reported profit $m 12.3 8 - 11 38 37 62 - 3 75 84 99 Adjusted profit $m 12 33 - 11 38 37 63 22 75 84 99 Adjusted EPS ¢ 3.97 4 - 1 4 4 11.7 2.7 8.1 9.0 10.6 EPS Growth % 22.2% -76.7% 197.4% 11.2% 16.9% DPS ¢ 1.5 2.0 2.1 2.3 2.4 3.8 4.1 4.7 5.1 7.4 PE (adj) x 12.7 54.6 18.4 16.5 14.1 EV/EBITDA x 17.3 18.1 9.2 8.1 7.5 EV/EBIT x 19.0 24.0 10.9 9.7 8.9 PGCFPS x 18.8 63.8 12.4 10.8 9.7 P/BV x 1.3 1.3 1.2 1.2 1.1 Dividend yield % 2.6% 2.8% 3.1% 3.4% 4.9% Franking % 100 100 100 100
Cash flow analysis
EBITDA $m 12 33 172 192 208
- Net Interest Paid $m - 1 - 11 - 26 - 26 - 23
- Tax Paid $m - 5 - 21 - 35 - 39 - 46
- Other (inc Working Capital & Associates) $m 11 51 15 18 20
Net Operating Cashflow $m 18 53 126 146 160
Investing Cashflow
- Capex $m - 8 - 78 - 49 - 41 - 88
- Acquisitions/ investments $m - 97 - 214 - 123 - 18 - 50
+ Other $m 0 - 0 - - -
Net Investing Cashflow $m - 104 - 291 - 171 - 59 - 138
Financing Cashflow
- Distributions/Dividends paid incl. NCSH $m - 14 - 29 - 31 - 35 - 42
+ Equity Movements (inc. DRP) $m 152 84 - - -
+ Debt Movements $m 4 237 80 - 20 -
Net Financing Casflow $m 142 292 49 - 55 - 42
Net increase/decrease in cash $m 56 54 3 32 - 20
Balance Sheet Cash $m 79 119 122 154 134 Current assets $m 73 149 153 154 156 Investments $m 399 462 484 486 539 Fixed $m 121 363 453 442 478 Intangible $m 198 600 611 623 617 Other assets $m 10 28 28 28 28 Total Assets $m 881 1,721 1,851 1,888 1,952
Short Term Debt $m 8 19 19 19 19
Long Term Debt $m 103 424 504 484 484
Other Liabilities $m 84 186 186 186 186
Total liabilities $m 194 630 710 690 690
Shareholders Funds $m 687 1,091 1,141 1,198 1,262
Financial metrics
Book value per share $ 1.12 1.18 1.23 1.28 1.34
NTA per share % 0.80 0.53 0.57 0.62 0.68
Return on assets % 9.1% 1.7% 4.2% 4.5% 5.2%
Return on invested capital % 12.5% 6.6% 11.0% 11.5% 12.4%
Return on Equity % 11.1% 2.5% 6.7% 7.2% 8.1%
Net debt/ Equity % 5% 30% 35% 29% 29%
Net debt/Net debt + equity % 4% 23% 26% 23% 23%
Valuation
Logistics (ex-POTA) $m 655 737 876 918 954
Bulk & Ports (ex-POAGS) $m 568 661 701 733 763
AAT (proportionate) $m 108 144 149 154 159
NSS (proportionate) $m 55 73 75 76 78
Prixcar (proportionate) $m 40 56 60 63 66
Properties $m 83 289 307 329 337
Overheads and Management fees $m -79 -80 -80 -80 -80
Net Debt $m -71 -330 -416 -363 -383
Valuation 1,065 1,471 1,586 1,737 1,799
EFPOWA m 311 543 813 925 931 939
Macquarie Private Wealth Qube Holdings
6 December 2012 3
Important disclosures:
Recommendation definitions
Macquarie - Australia/New Zealand
Outperform – return >3% in excess of benchmark return Neutral – return within 3% of benchmark return Underperform – return >3% below benchmark return Benchmark return is determined by long term nominal GDP growth plus 12 month forward market dividend yield
Macquarie – Asia/Europe
Outperform – expected return >+10% Neutral – expected return from -10% to +10% Underperform – expected return <-10%
Macquarie First South - South Africa
Outperform – expected return >+10% Neutral – expected return from -10% to +10% Underperform – expected return <-10%
Macquarie - Canada
Outperform – return >5% in excess of benchmark return Neutral – return within 5% of benchmark return Underperform – return >5% below benchmark return
Macquarie - USA
Outperform (Buy) – return >5% in excess of Russell 3000 index return
Neutral (Hold) – return within 5% of Russell 3000 index return
Underperform (Sell)– return >5% below Russell 3000 index return
Volatility index definition*
This is calculated from the volatility of historical price movements.
Very high–highest risk – Stock should be
expected to move up or down 60–100% in a year – investors should be aware this stock is highly speculative.
High – stock should be expected to move up or down at least 40–60% in a year – investors should be aware this stock could be speculative.
Medium – stock should be expected to move up or down at least 30–40% in a year.
Low–medium – stock should be expected to
move up or down at least 25–30% in a year.
Low – stock should be expected to move up or down at least 15–25% in a year.
* Applicable to Australian/NZ/Canada stocks only
Recommendations – 12 months
Note: Quant recommendations may differ from
Fundamental Analyst recommendations
Financial definitions
All "Adjusted" data items have had the following adjustments made:
Added back: goodwill amortisation, provision for catastrophe reserves, IFRS derivatives & hedging, IFRS impairments & IFRS interest expense Excluded: non recurring items, asset revals, property revals, appraisal value uplift, preference dividends & minority interests
EPS = adjusted net profit / efpowa* ROA = adjusted ebit / average total assets
ROA Banks/Insurance = adjusted net profit /average
total assets
ROE = adjusted net profit / average shareholders funds Gross cashflow = adjusted net profit + depreciation
*equivalent fully paid ordinary weighted average number of shares
All Reported numbers for Australian/NZ listed stocks are modelled under IFRS (International Financial Reporting Standards).
Recommendation proportions – For quarter ending 30 Sept 2012
AU/NZ Asia RSA USA CA EUR
Outperform 50.00% 56.85% 61.54% 41.38% 63.19% 44.15% (for US coverage by MCUSA, 7.35% of stocks covered are investment banking clients) Neutral 36.62% 25.14% 27.69% 52.13% 30.77% 30.57% (for US coverage by MCUSA, 9.31% of stocks covered are investment banking clients) Underperform 13.38% 18.02% 10.77% 6.49% 6.04% 25.28% (for US coverage by MCUSA, 0.00% of stocks covered are investment banking clients)
Company Specific Disclosures:
Important disclosure information regarding the subject companies covered in this report is available at www.macquarie.com/disclosures.
Analyst Certification: The views expressed in this research reflect the personal views of the analyst(s) about the subject securities or issuers and no
part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst principally responsible for the preparation of this research receives compensation based on overall revenues of Macquarie Group Ltd (ABN 94 122 169 279, AFSL No. 318062) (“MGL”) and its related entities (the “Macquarie Group”) and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations.
General Disclosure: This research has been issued by Macquarie Securities (Australia) Limited (ABN 58 002 832 126, AFSL No. 238947) a Participant
of the Australian Securities Exchange (ASX) and Chi-X Australia Pty Limited. This research is distributed in Australia by Macquarie Equities Limited (ABN 41 002 574 923, AFSL No. 237504) ("MEL"), a Participant of the ASX, and in New Zealand by Macquarie Equities New Zealand Limited (“MENZ”) an NZX Firm. Macquarie Private Wealth‟s services in New Zealand are provided by MENZ. Macquarie Bank Limited (ABN 46 008 583 542, AFSL No. 237502) (“MBL”) is a company incorporated in Australia and authorised under the Banking Act 1959 (Australia) to conduct banking business in Australia. None of MBL, MGL or MENZ is registered as a bank in New Zealand by the Reserve Bank of New Zealand under the Reserve Bank of New Zealand Act 1989. Any MGL subsidiary noted in this research, apart from MBL, is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Australia) and that subsidiary‟s obligations do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of that subsidiary, unless noted otherwise.
This research is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice, you should consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. This research has been prepared for the use of the clients of the Macquarie Group and must not be copied, either in whole or in part, or distributed to any other person. If you are not the intended recipient, you must not use or disclose this research in any way. If you received it in error, please tell us immediately by return e-mail and delete the document. We do not guarantee the integrity of any e-mails or attached files and are not responsible for any changes made to them by any other person. Nothing in this research shall be construed as a solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any transaction. This research is based on information obtained from sources believed to be reliable, but the Macquarie Group does not make any representation or warranty that it is accurate, complete or up to date. We accept no obligation to correct or update the information or opinions in it. Opinions expressed are subject to change without notice. The Macquarie Group accepts no liability whatsoever for any direct, indirect, consequential or other loss arising from any use of this research and/or further
communication in relation to this research. The Macquarie Group produces a variety of research products, recommendations contained in one type of research product may differ from recommendations contained in other types of research. The Macquarie Group has established and implemented a conflicts policy at group level, which may be revised and updated from time to time, pursuant to regulatory requirements; which sets out how we must seek to identify and manage all material conflicts of interest. The Macquarie Group, its officers and employees may have conflicting roles in the financial products referred to in this research and, as such, may effect transactions which are not consistent with the recommendations (if any) in this research. The Macquarie Group may receive fees, brokerage or commissions for acting in those capacities and the reader should assume that this is the case. The Macquarie Group„s employees or officers may provide oral or written opinions to its clients which are contrary to the opinions expressed in this research.