In case you missed the company news we have published this week, here is a summary
Adani Abbot Point Coal Terminal (AAPT) update
The recent vote/resolution was passed. Whilst this results in some structural changes as set out in the Intercreditor Proposal, these are seen to be relatively minor and procedural in nature. Moreover, the credit rating agencies have affirmed their ratings and the majority of bank debt, which ranks the same as the bondholders, voted in favour of the changes.
Our most recent credit update “Adani Abbot Point credit margin increase provides buying opportunity” (in related articles below) encapsulates our views on this credit and addresses the regular negative press. Despite the continuous negative news flow, we don’t believe the developments with the Carmichael mine, potential ‘T0’ terminal expansion (or not) and the persistent environmental concerns will have a major negative impact on the credit quality of AAPT. The continued soft coal price is seen as more of an issue behind some of the bond price weakness.
Relative value
Notwithstanding the coal price, the current pricing on the AAPT 2020 bonds appear very attractive with credit margins remaining well above +300bps.
Whilst not directly comparable, we note that the Indian parent (Adani Ports) which has the same credit rating, issued US$650m of five year bonds at a margin of +195bps last week.
The AAPT 2018 bonds are trading at a credit margin below +300bps and the vast majority of BBB/BBB- companies in the AUD bond market with four to six years to maturity are trading at credit spreads of +125bps to +175bps.
Dicker Data 1H15: Integration on track, full year forecast confirmed
The company is progressing in-line with forecasts given at the time of the FIIG-led origination, and is ahead of its own forecasts. Dicker Data (DDR) has released a presentation
summarising its performance during 1H15 to 30 June. For more detail see “Dicker Data 1H15: Integration on track, full year forecast confirmed”, in the related articles below.
Also of note is that DDR is seeking to do an equity raise “in the next couple of weeks” with proceeds predominately to be used to pay down debt. DDR looks good value, with credit metrics set to improve notably post share issue.
David Dicker 22/07: “We are still working on getting some shares away which I am pretty confident we will do in the next couple of weeks. If we can do that, the interest savings alone will be substantial.”
Fortescue quarterly report
On Thursday 23 July 2015, Fortescue released its 4Q15 quarterly report which appears to be broadly in line or slightly better than forecasts.
Key highlights include:
- Cash up USD$0.6bn from 3Q15 to USD$2.4bn and net debt down USD$0.2bn to USD$7.2bn
- Shipments for the quarter were 42.4 million tonnes, up 5% on the 3Q15 and up 10% on the corresponding fourth quarter last year. Bloomberg consensus forecasts were for 41.4 million tonnes
- Realised price of USD$52/dmt (dry metric tonne), from an average contract price of USD$60/dmt, which equates to 87% and in the middle of the 85%-90% price realisation guidance
- C1 costs in the 4Q15 of USD$22/wmt (wet metric tonne) and USD$19/wmt in the month of June 2015. USD$22/wmt for the quarter was down 14% from 3Q15 and 35% lower than a year earlier
- Iron ore shipments were up by 33% for FY15 at 165.4 million tonnes, slightly higher than the company’s previous guidance of 160-165 million tonnes
- Fortescue confirmed its FY16 forecasts of 165 million tonnes of shipments and costs of USD$18/wmt
- The company will report their full year results on 20 August 2015
For details, download the Quarterly Report - Fortescue Metals Group.
Newcrest June Quarterly Report
On Thursday 23 July 2015, Newcrest released its report for the three months ended 30 June 2015. Gold production was up on linked quarter and year on year. All in sustaining costs were down year on year, but slightly up on linked quarter.
For details, download the Quarterly Report - Newcrest Mining Limited.