Valuation Of A Container Terminal 2005
Upcoming SlideShare
Loading in...5
×
 

Like this? Share it with your network

Share

Valuation Of A Container Terminal 2005

on

  • 4,705 views

This presentation presents the various steps to undertake to value a container terminal.

This presentation presents the various steps to undertake to value a container terminal.

Statistics

Views

Total Views
4,705
Views on SlideShare
4,689
Embed Views
16

Actions

Likes
0
Downloads
178
Comments
0

2 Embeds 16

https://www.linkedin.com 9
http://www.linkedin.com 7

Accessibility

Categories

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Valuation Of A Container Terminal 2005 Presentation Transcript

  • 1. Workshop on Valuing a Container Terminal BMT Maritime Consultants TOC Asia 2005 Hong Kong British Maritime Technology 1
  • 2. Introduction This workshop will provide and Business insight into how a container Opportunities terminal can be valued HOW TO MAKE 600 mins of Local Outgoing Calls FREE. Ask me How? Call me Now!! This provides a seller with an 50 LEADERS NEEDED FOR GLOBAL idea of the price they should INTERNET BIZ. Call Now receive and a buyer with a price ASIAN CONTAINER TERMINAL for sale. Operating terminal, 125,000 TEU pa. Tenders they pay for a terminal wanted. Call Richard Szuflak +61 7 3221 1066 NEED LITTLE CAPITAL. Start you own biz to build your career. Call Henry HP for arrangement STOCK & OPTION Seminar $650 2 days. Trade US Mkt Live. Free CD. Computer Courses $50 PC ASSEMBLY, Networking Web Design/ HTML, Red Hat Linux British Maritime Technology 2
  • 3. Should You Use a Black Box Model for a Container Terminal Valuation? We believe you shouldn’t! – Different objectives of the vendors • Encourage economic regional development • Obtain operating expertise / Infrastructure investment – Different objectives of the purchasers • To generate return on investment • Strategic geographical location – Different environmental aspects – Ownership structures of the concession British Maritime Technology 3
  • 4. Should You Use a Black Box Model for a Container Terminal Valuation? Different ownership structures that can occur: Owner Port Marine Approach Port Owner Quay (Depth) Port Owner Full ownership Concessionaire Land Concessionaire Civil Infrastructure CT Operations Concessionaire British Maritime Technology 4
  • 5. The Way We Assess a Concession’s Real Value To do this BMT develops three coupled models: – Throughput model – which forecasts container throughput – Operational model – which simulates the operations and development of the terminal against throughput – Financial model – which constructs P&L and Balance Sheets on an annual basis for the valuation period A valuation period of between 20 and 30 years is most common to match the concession period From these models we can provide a financial value British Maritime Technology 5
  • 6. Valuation Process British Maritime Technology 6
  • 7. Throughput Model Hinterland Assessment Hinterland supply and demand forecast – Short Term (0-5years) • Current export/import demand in the region • Local infrastructure (Road/Rail/Inland waterways) • Direct competition • Historical Growth Rates – Medium Term • Expected trends – specific to container industry • Growth and development of industries conducive to container volumes • Growth of logistics centres at the port • Growth and development of infrastructure to container volumes • Development of intermodal connectivity and logistics chain alliances – Long Term • Gross Domestic Product and long term expectations British Maritime Technology 7
  • 8. Throughput Model Tariff Assessment The tariff levels are also generated: – For the ports: • Terminal handling • Port dues • Storage • Miscellaneous charges – For distribution: • Transport costs • Distribution costs – Customer Study • Interview terminal customers to determine their expectations on pricing British Maritime Technology 8
  • 9. Throughput Model Example Figures Typical handling charges vary between USD60 and USD330 Approximate Average Container Handling Charges 328 350 300 259 250 US$/TEU 228 250 202 201 200 199 190 173 163 156 200 140 120 118 117 110 150 93 75 100 50 0 Ne erm om ap s al n d ilip iu m Ta nds a a d na a st in Ja es Fr ile St il n a Ch re Ph lg n n er y a Sp e Ch y ng n e Th in d az ite Ca rali th an Ki d Be wa pa c si l Au a Ita o M ila at an G gd ay la Si pi ite Br i Un Un World Bank British Maritime Technology 9
  • 10. Throughput Model Regulatory/Competition Assessment To determine the appropriate tariff a detailed study of the competition in the vicinity is undertaken – Direct competition – Other container and break bulk terminals – Indirect competition – other modes of transport such as road, rail, barging operations Regulatory study – Taxes and trade legislation obtained British Maritime Technology 10
  • 11. Throughput Model BMT Freight Model BMT uses its proprietary Freight Flow simulation model (EFM) to forecast future freight volumes through a port under various competitive scenarios The Asian Freight Model (AFM) is under development It is a logistics model that establishes trade flows at minimum costs Allows an accurate forecast of future freight through a port Simulate impact of tariff changes on trade flows Trade Capture BMT Freight Flow Simulation Model British Maritime Technology 11
  • 12. Throughput Model Added Value Gives the concessionaire a better understanding of future throughput Gives a platform to produce throughput scenarios and establishes income drivers Value can be added through the development of road, rail and inland shipping into the terminal hinterland. In the case of transshipment terminals, feeder and barging operations can be looked at Identify where weak strong links lie in the logistics chain This has an impact on the potential income which flows through to the financial evaluation model British Maritime Technology 12
  • 13. Operational Model Key Objectives and Capability Model needs to be able to calculate/estimate – Cost of the current operation – Identify and integrate the main cost drivers such as throughput and productivity – Evaluate the cost impact for different equipment choices or container handling systems – Evaluate berth and yard capacities – Establish capital expenditure requirements based on the cost drivers British Maritime Technology 13
  • 14. Operational Model Step 1 Model the current container terminal operation – Identify variable and fix cost components – Model current operational processes and work practices – Establish current productivities of the main operational functions i.e. Vessel operation, road/rail exchange – Calibrate with current operational costs to establish the accuracy of the model British Maritime Technology 14
  • 15. Operational Model Step 2 Establish alternative equipment choices and model their operational costs under different throughput and productivity scenarios – Top lift, reach stacker direct/indirect – Straddle carrier – RTG – Automated RMG + AGV (Trailer or straddle carrier) For all the options personnel and equipment requirements need to be established British Maritime Technology 15
  • 16. Operational Model Step 2 Example Vessel Operation Costs are related to the time a container crane is deployed and its personnel paid. Gross crane productivity is the best measure although it does not incorporate costs that are incurred when the vessel starts or ends during shifts What is the effect on costs per vessel move? Simple comparison reach stacker versus straddle carrier handling system British Maritime Technology 16
  • 17. Productivity & Cost for Different Resource Deployment 55.00 50.00 45.00 Reach stacker EURO per move 40.00 Reach stacker Straddle carriers 35.00 30.00 25.00 Straddle carrier 20.00 15 20 25 30 35 productivity British Maritime Technology 17
  • 18. Operational Model Step 3 Capacity Evaluation Berth capacity – Quay length – Number of cranes – Working hours – Productivity – Utilisation factors Yard capacity – Available space – Stacking system – Dwell times – Yard utilisation factors These capacities are critical to determine at what stages additional equipment or change to a different handling system is required British Maritime Technology 18
  • 19. Operational Model Example CAPX Step changes in infrastructure Infrastructure requirements 35 30 25 Amount of Equipment 20 Growth in terminal corresponds to a higher 15 requirement and use of 10 infrastructure 5 0 05 07 09 11 13 15 17 19 21 23 25 20 20 20 20 20 20 20 20 20 20 20 Trailers Tractors Rail Mounted Gantries Rubber Tyred Gantries Reach Stackers/Forks Ship to Shore Cranes Mobile Harbour Cranes British Maritime Technology 19
  • 20. Operational Model Step 4 Risk Analysis Example labour environment Ideally a container terminal operator wants full control and responsibility of its personnel – Direct employment – Enterprise agreements that cover personnel costs, deployment and flexibility Worst case scenario (hypothetical) – Labour pool where the conditions are negotiated between the union and a third party – Many unions with specific work coverage – No opportunity for enterprise specific deployment This will reduce the enterprise/concession value British Maritime Technology 20
  • 21. Financial Model The goal of the financial model is to determine a value for the concession based on free cash flows (FCF) and provide analysis tools Defined as the cash in the business that is available to financiers Created from the throughput and operational models Defined as: Net Profit – Capital Expenditure – Change in Working Capital Free Cash Flows and other indicators are then analysed to develop a value for the concession – Multiple of EBITDA (Enterprise Multiples) • High infrastructure intensive firms • Good before financing comparison – Internal Rate of Return – Net Present Value – Financial Ratio Analysis British Maritime Technology 21
  • 22. Financial Model Case Study Heavy Capital Expenditure in Free Cash Flow assets causes the free cash 14,000 flow in initial years to be 12,000 10,000 8,000 negative. This provides an 6,000 EUR '000 4,000 2,000 insight as to when 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 -2,000 expenditure is payable -4,000 -6,000 -8,000 Year Expected Financing Requirements Inflows of capital is required 14,000 13,000 12,000 to get the terminal into 11,000 10,000 9,000 EUR '000 operating condition 8,000 7,000 6,000 5,000 4,000 – In later years this can be 3,000 2,000 1,000 0 repaid 2006 2007 2008 2009 Year 2010 2011 2012 2013 Required Debt Required Share Capital British Maritime Technology 22
  • 23. Financial Model Example of operating costs over the concession Staffing costs are found to Operating Expenses Make Up make up a high proportion of 100% 90% expenses in a container 80% 70% 60% terminal 50% 40% 30% 20% 10% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Energy and Lubes Maintenance Costs per Annum Operating Insurance Staff Costs per Annum Operating revenue often lies Operating Income Make Up between 50% and 75% in 100% 90% 80% European container terminals 70% 60% 50% 40% 30% 20% 10% 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Revenue Expenses British Maritime Technology 23
  • 24. Financial Model Example of CAPX over life of Concession Initial acquisition and Capital Expenditure Schedule replacement of infrastructure 12,000 is high 10,000 8,000 EUR '000 6,000 – Varies as per operational 4,000 model 2,000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 -2,000 Year Infrastructure Container Handling Intangibles IT System IT Hardware Growth in terminal Depreciation and Net Book Value corresponds to a higher 3,500 45,000 Net Book Value (EUR '000) Depreciation (EUR '000) 3,000 40,000 35,000 requirement and use of 2,500 2,000 30,000 25,000 infrastructure 1,500 1,000 20,000 15,000 10,000 500 5,000 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total Depreciation Total NBV British Maritime Technology 24
  • 25. Financial Model Processing of the Results NPV For Operating Scenarios IRR For Financial Scenarios 15% Minimal Compet it ion Loan Interest 9% Tariff Rate Logical Assum ption 7% Aggressive Compet it ion 0% 50% 100% Pesimist ic Basic Opt imist ic Gearing Throughput Volum e IRR NPV 0%-5% 5%-10% 10%-15% EUR '000 0-50,000 50,000-100,000 100,000-150,000 15%-20% 20%-25% Important phase is to investigate the results of the valuation – Scenario Analysis – Sensitivity Analysis British Maritime Technology 25
  • 26. Sensitivity terminal -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% Size of site Beta Market Risk Risk Free Rate Debt To Equity breaks down Taxes Term Interest Rate Mobile Harbour British Maritime Technology Ship to Shore Financial Model Rail Mounted Rubber Tyred Reach Tractors Trailers Infrastructure Allows for mitigation planning Intangibles Power Fuel and Lubes IT systems O/H's Mobile Harbour Ship to Shore Rail Mounted NPV Low % Rubber Tyred Reach Variable Tractors Trailers Sensitivity of input Variables Infrastructure NPV High % Terminal NPV sensitivity to a 10% change in variable Third party Power fixed Business Tax Insurance Management Land Tax Operations Management Middle Other Additional Staff Storage – Impact of the interest rate to the companies cash flow Congestion Net working Max. crane The impact of various variables on the model is investigated # of days per Max. Cranes / Lifts per hour Max. RTG The degree of influence can correlate to the actual operations of the – Impact of a number of cranes could show the impact on value if it 26
  • 27. Financial Model Example Enterprise Value Calculation (Based on EBITDA) Enterprise Value of the firm (Takeover EV/EBITDA Multiples of Businesses in the Port price) can be determined Industry – Forecast cash flows 13.9 11.7 11.3 11.3 – Comparable enterprise multiple 9.9 9.7 9 8.8 8 7.8 6.9 Enterprise multiple of comparable firms 4.8 4.7 4.1 Select an firm similar to its state of development/market * T * OP a I ho r t H es er i Au ers SA No PH t /S M ts rts reh H TS ko d fry &O TS BP or g Jo hpo N n P la n * E /HP Po ha /H P CB HM or /P an * I /N ik rP * H Am of o ld H IC /P rd r t/A P Enterprise multiple should increase as se ca ck III aur T/ rt ie n C o at & do f T C N uf value increases e l rt o lD oo * P Po el ow in *P * Enterprise value = Market Value + Debt – EV * Enterprise Value Acquisitions Cash Estimate that after 5 years the firm is in steady state Earnings before Interest, Taxes, Depreciation and Amortization Debt: 16 mill Cash: 28 mill 14,000 Estimate the this firm is comparable to 12,000 ECT/HPH (x6.9) 10,000 EUR '000 8,000 Enterprise Value approx 65.6 mill (9.5 mill 6,000 EBITDA x 6.9) 4,000 Market Value 77.6 mill (65.6-28+16) 2,000 - Discount back at WACC over 5 years 48.9 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 million value British Maritime Technology 27
  • 28. Financial Model Example of IRR and NPV NPV For Operating Scenarios Net present value of the cash flows describes 40 million Minimal Compet it ion Internal rate of return 20% Logical Tariff Assum ption Value under different Aggressive Compet it ion operating and financial Pesimist ic Basic Opt imist ic Throughput Volum e scenarios and sensitivity 0-50,000 50,000-100,000 NPV 100,000-150,000 EUR '000 If there have been recent sales in the industry these IRR For Operating Scenarios can also be valued forward to Mi ni mal Competi ti on a comparative point in this T ar if f model Logi cal A ssump t i o n Aggr essi ve Competi ti on Pesi mi sti c Basi c Opti mi sti c T hr o ug hp ut V o lume IR R 0.0%-10.0% 10.0%-20.0% 20.0%-30.0% 30.0%-40.0% 40.0%-50.0% British Maritime Technology 28
  • 29. Expected Rates of Return British Maritime Technology 29
  • 30. Conclusion Upper bound for buyer is 40-50 Business million euro. Opportunities Seller also knows this is the HOW TO MAKE 600 mins of Local Outgoing Calls FREE. Ask me How? Call me Now!! upper bound based on accepted 50 LEADERS NEEDED FOR GLOBAL assumptions INTERNET BIZ. Call Now ASIAN CONTAINER TERMINAL for sale. Number of techniques can be Operating terminal, 125,000 TEU pa. EUR 50,000,000. Call Richard Szuflak +61 7 3221 employed to give a basis for 1066 NEED LITTLE CAPITAL. Start you own biz to investment build your career. Call Henry HP for arrangement Mr Szuflak would be able to STOCK & OPTION Seminar $650 2 days. update his ad with a 50 million Trade US Mkt Live. Free CD. Euro price tag Computer Courses $50 PC ASSEMBLY, Networking Web Design/ HTML, Red Hat Linux British Maritime Technology 30