LTP01_2013-14 Petronet LNG, the first mover advantage

 

Petronet LNG Limited PLNGL, one of the fastest growing world-class companies in the Indian energy sector,  has set up the country's first LNG receiving and regasification terminal at Dahej, Gujarat, and is in the process of building another terminal at Kochi, Kerala. While the Dahej terminal has a nominal capacity of 10 MMTPA [40 MMSCMD of natural gas], the Kochi terminal will have a capacity of 5 MMTPA [20 MMSCMD of natural gas].

GDF SUEZ, the largest importer of LNG in Europe for the last 30 years, is the strategic partner of the company and holds 10% equity in the company. PLNGL is jointly promoted by Central PSU namely ONGC, IOC, BPCL, GAIL
source;-
http://petronetlng.com/photo-gallery.aspx
http://petronetlng.com/photo-gallery.aspx?id=Arch

POSITIVES FOR THE STOCK

1. Price of domestic produced natural gas is more than international price  $3.254 mmbtu
get daily price natural gas here http://www.wtrg.com/daily/gasprice.html

ONGC will get $5.25 per million British thermal unit (MmBtu) in the western offshore and
$5 per mmBtu for fields in Cauvery basin,  $4.75 per MmBtu for fields in Krishna Godavari
basin off the Andhra Pradesh coast. for the gas it produces for new fields in nominated blocks .
The price approved is more than $3.818 per MmBtu that the government had set for the gas
ONGC produces from its operational fields in the blocks given to it on nomination basis.
The price for consumers of this gas, known as APM (administered price mechanism) or
government administered gas, after including royalty is $4.2 per MmBtu,
http://petronetlng.com/NewsContent.aspx?newsid=280

 Internationally, natural gas prices have crashed due to the economic slowdown and
availability of shale gas in the US market. Imported liquefied natural gas (LNG) in India is now available at a landed price of about $4.25 a million British thermal unit, making the differential between domestic and imported gas a comfortable $1 or so.

2. Petronet LNG will diversify into power, city gas

Despite the biggest global gas field coming into production in 2011, the share of natural gas in the total energy basket in India remains a paltry 12.5 per cent, compared to a global average of around 25 per cent. The potential demand is, therefore, immense. The falling gas prices, plus the availability of extra output, such as from Indias Krishna-Godavari field, have raised enthusiasm for gas, and led to increasing use of the fuel variety in both China and India. China as a gas user is already as big as OECD countries such as Germany or the UK, and along with India can be expected to see ongoing increases in consumption, although coal will remain the major energy source in both countries

Petronet LNG, is actively considering diversification process and are in talks are on with its promoters Gail Ltd, Oil and Natural Gas Corporation (ONGC), Indian Oil Corporation and Bharat Petroleum Corporation (BPCL) for possible city gas distribution venture

Petronet LNG is also to set up a 1200 mw power plant at Dahej  and has conduct active talk with government authorities for selection of  the site near to the location of our LNG terminal there.
http://petronetlng.com/NewsContent.aspx?newsid=334

3. Lack of development in cross country gas pipline is hindrance

Natural gas pricing is a big issue in our country. India the only country in the world, where a number of different prices are in vogue. The government is actively considering a price pooling mechanism to address this issue. For a country of our size, affordability of energy source  is an important thing. From consumers aspect also, it is a good thinking to keep uniform approach to the gas prices.
The governments decision to allocate only 60% gas requirement of a power plant from domestic sources and making them source the rest on their own is a different way of averaging out the natural gas prices. However, a more structured way should be set up. If that happens, the differential between the cost of domestic and imported gas would come down.
http://petronetlng.com/NewsContent.aspx?newsid=301
The Prime Minister-appointed Rangarajan Committee has suggested mandating a price of domestically produced natural gas at an average of international hub prices and cost of imported LNG instead of present mechanism of market discovery.

The panel  suggested first taking an average of the US, Europe and Japanese hub or market price and then averaging it out with the netback price of imported liquefied natural gas (LNG) to give sale price of domestically produced gas.

4. Kochi terminal to be functional in quarter 1, 2013-14

Petronet LNG's Kochi terminal will be commissioned by March end or early April 2013. Terminal is getting fully ready for commissioning and the pipeline which is connecting near by Kochi area is also complete . Also the consumers are also tie up which includes FACT, BPCL, kochi refinery, NTPC Kayamkulam among few. also talk are with Electricity Board/ state government for setting up 500-600 Mw power plant for power deficit Kerala.


5. Long term contract for gas supply

The company has already tied up with Ras Laffan Liquefied Natural Gas Co. Ltd. (RasGas),
Qatar for 7.5 MMTPA of LNG on a long term basis to Dahej LNG terminal. and with Exxon
Mobil Corporation for 1.5 MMTPA of LNG from the Gorgon LNG Project, Australia on a
long term basis to the Kochi LNG terminal. Additional LNG being sourced through Spot /
Short Term Contracts & sold to Offtakers/ Bulk Buyers.

6. Demand not fully met by falling domestic gas production

  "As domestic gas availability is projected to decline in the next two to three years, the additional demand will have to be primarily met through imported LNG," jaipal reddy said in a written to the upper house of parliament.

Natural gas production from the eastern offshore KG D6 block, which is operated by Reliance Industries, is projected to fall to 24 million cu m/day in the 2013-14 fiscal year compared with
28 million cu m/d in the 2012-13. It is forecast to fall further to 20 million cu m/d in 2014-15.

Total domestic gas production for 2012-13 is forecast to reach 104 million cu m/d, which includes production from the fields operated by Oil and Natural Gas Corp. The figure will increase marginally to 105 million cu m/d in 2013-14 and to 112 million cu m/d in 2014-15, the minister said. These figures compare with domestic supply of 120 million cu m/d in June 2011, with LNG imports averaging 46 million cu m/d, the minister said.

Demand as on June 2011 was  166 million cu m/d which would rise to 254.2 million cu m/d in the 2013-14, 284.27 million cu m/d in 2014-15 .

India's LNG imports are forecast to increase as the country's LNG terminal capacity is expected to reach 50 million mt/year by 2017 from around 14 million mt/year at present.
Petronet LNG, the largest of India's two incumbent LNG terminal operators and importers, ran its 10 million mt/year capacity terminal at Dahej in Gujarat, western India, at 107% in 2011-12.
Petronet is working on increasing terminal capacity at Dahej to 15 million mt/year and is also expected to commission its 5 million mt/year Kochi terminal at the end of this year.

Shell is expanding capacity at its Hazira terminal, also in Gujarat, to 5 million mt/year from 3.6 million mt/year to meet growing LNG demand.

http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/7577115

the performance of stock Petronet LNG for th period May 2012 to Feb 2013 is as follows

 

7. The performance of the company for trailing four quarter  end December 2012 speaks it all
 an growth of over 29 percent in total turnover however with a fall  in operating margin and
 net profit margin to the tune of 15.5 percent and 12.5 percent respectively. in toto the trailing
twelve monthsearning per share has increase by 13.5 percent to Rs 16 .



























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used with the general free license from providers.
 CAUTIONARY NOTE" - this blog is not responsible for any loss, whatsoever .
please do consult an investment advisor if your not able to evaluate the investment /
economic / risk scenario independently. also make use of call / put option to save your hard earned investments.
 

Why JPASSOCIATE is underperfomer

JAIPRAKASH ASSOCIATES LTD at Rs 71.70 as on 15 Feb 2013

is trading down 16.5% / 25.5% over year / month respectively

the reason for underperformance is quite obvious

1 It was able to maintain the growth of meagre 4.2 % in the income

2 It is not able to curtail the  expenditure which has increased marginally by 6.9 %

3 This lead the OPM to fall from 28.87 percent to 26.48 percent

4  It is burdened due to 18.1 percent increase in cost of financing debt

5  This has lead to net profit falling over 35.5 percent

the published results available at www.bseindia.com was analysed as follows

the strength of jaiprakash associates, however lies in
1) the facts that jpassociate owns  67.93 %  of Jaiprakash Power Ventures which is currently
worth Rs. 5500 crore and 83.16 %  of Jaypee Infratech which is currently worth Rs. 5200 crore
however 72.6%  /67.39 %  of such shares are pledged with various borrower
2) as such out of market capitalisation  Rs. 15470 crore an amount of Rs. 10700 crore is
represented by market value of listed subsidiries leaving a value of Rs. 4770 crore for standalone
3) though the company was not able to offload its stake in Jaypee Infratech through OFS
recentlyit may do it so in coming months when the market sentiment improves.
4) the company could bring down the borrowing of around 600 crore and hence of cost of
servicing debt around 66 crore if it utilise the money from offloading of  stake sale
 in Jaypee Infratech (as and when it happens)
5) picking up of activity in infrastructure space and lowering of interest (as and when it happens) will enable the company to get better market valuation.

TILL SUCH TIME THE LONG TERM PERSPECTIVE OF COMPANY MAY REMAIN BLEAK

on technical side Williams %R indicator at around 75 indicated that the scrip seems to be oversold with and likelness of MACD in negative 5 to 6 territory  which seems the stock shall correct positively garnering a return outlook of around 8-10% during 18 to 28 Feb 2013 as detailed below

Conclusion 

This coverage is made to anlayse the reason for underperformance and

conditions on happening of which the stock may move up from the current level.

The stock which is on  long term downtrend at current situation

however on short term basis the stock looks promising with a return of 8-10%