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Company is the world’s largest (based on fleet size) provider of intermodal containers on lease with a total fleet of more than 1.3 million containers, representing over 2,000,000 TEU. Company lease containers to more than 300 shipping lines and other lessees, including each of the world’s top 20 container lines, as measured by the total TEU capacity of their container vessels. Company provide its services worldwide via a network of 14 regional and area offices and over 300 independent depots in more than 130 locations. Company principally lease dry freight containers.
Trencor, a company publicly traded on the JSE Limited (the "JSE") in Johannesburg, South Africa, and its affiliates currently have beneficiary interest in a majority of company's issued and outstanding common shares and will continue to have a majority interest after giving effect to this offering.
Revenue
Company generate revenue from four segments:
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Container Ownership (representing 52% of its fleet as of June 30, 2007),
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Container Management (representing the remaining 48% of its fleet as of June 30, 2007),
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Container Resale (of its owned and managed containers and as a trader)
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Military Management
Leasing of its own containers generate maximum revenues for company
Industry
To know more about Containers lessor industry. Click here...
Competition
Company compete with approximately ten other large or medium size container leasing companies, many smaller lessors, companies and financial institutions offering finance leases, and promoters of container ownership and leasing as a tax-efficient investment. It is common for shipping lines to utilize several leasing companies to meet their container needs.
Customers/industries served
Company's main customers are cargo shipping lines which take company's containers on lease.
Offer & Objects of issue
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Financials ($ in thousand)
Company's financial year ends on December 31.
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Consolidated Statements of Operations Data
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Six Months Ended June 30
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Fiscal Year Ended December 31
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Revenues:
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2007
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2006
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2006
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2005
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Lease rental income
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96,649
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90,679
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6.58%
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186,093
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188,904
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-1.49%
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Management fees
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10,141
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6,574
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54.26%
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16,194
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15,472
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4.67%
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Trading container sales proceeds
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7,162
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9,287
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-22.88%
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14,137
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16,046
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-11.90%
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Incentive management fees and general partner distributions
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-
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-
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-
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-
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2,874
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-
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Gain on sale of containers, net
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5,611
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4,186
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34.04%
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9,558
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10,456
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-8.59%
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Other
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286
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182
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57.14%
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480
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648
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-25.93%
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Total revenues
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119,849
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110,908
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8.06%
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226,462
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234,400
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-3.39%
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Total operating expenses
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60,248
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63,403
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-4.98%
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118,103
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119,848
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-1.46%
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Income from operations
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59,601
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47,505
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25.46%
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108,359
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114,552
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-5.41%
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Net other expense
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-14,362
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-9,902
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45.04%
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-28,280
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-24,518
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15.34%
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Income before income tax and minority interest
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45,239
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37,603
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20.31%
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80,079
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90,034
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-11.06%
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Income tax expense
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-2,775
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-2,061
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34.64%
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-4,299
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-4,662
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-7.79%
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Minority interest expense
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-9,150
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-10,277
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-10.97%
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-19,499
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-22,393
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-12.92%
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Net income
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33,314
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25,265
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31.86%
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56,281
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62,979
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-10.64%
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Company shows nearly 8% revenue growth in H1 2007 as compare to H1 2006 mainly due to 54% growth in container management income due to acquisition made in July 2006. Operating expenses are lower by nearly 5% mainly due to low depreciation.
Considering the capital intensive nature of industry the company's balance sheet is good so as its cash flows.
Valuation/Offer value ($ In million)
At offer price of $20 per share company shares are available at PE nearly 14 (annualizing First half FY 2007)
| H1FY 2007 profit |
Annualized |
EPS* |
PE** |
| 33.31 |
33.31*2 = 66.62 |
1.4 |
14.3 |
| *Total shares |
47,604,640
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| Valuation |
$952 million
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| **Share Price |
$20
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Company/Industry expectations
(these are just assumptions and company can perform differently)
Negatives
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Industry growth to much extent depends on global economic growth any slowdown can effect industry as well as company in big way.
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Competition is intense.
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Company operates a big fleet of containers, which needs a excellent operational management.
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Any slowdown in world trade can effect company adversely in big way.
Positives
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Size :- Company operate fleet of more than 1.3 million containers, representing over 2,000,000 TEU.
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Leading position :- Company is a leader in its industry with long operational history.
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Global presence :- Company provide its services worldwide via a network of 14 regional and area offices and over 300 independent depots in more than 130 locations. This type of geographical reach isolate company from any country specify or industry specify slowdown.
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Strong relationships :- Company lease containers to more than 300 shipping lines and other lessees, including each of the world’s top 20 container lines.
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Rising bilateral and multilateral trades :- More and more countries are signing bilateral and multilateral trade agreements to promote trade, this will result in more import-export of cargo and increase demand for containers.
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Recent acquisition :- On July 23, 2007, company purchased for $56.0 million the exclusive rights to manage the container fleet of Capital Lease Limited, Hong Kong. This is eighth largest container leasing company as measured by fleet size with over 500,000 TEU in its fleet. This is a big acquisition and has raised company's fleet size by more than 30% although since this is a management contract so the revenues will be low but margins will be high. Benefit of this acquisition is expected to start coming in from last quarter of FY 2007.
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Proceeds will be used by company to fund/repay cost of recent acquisition and debt repayment and will make balance sheet more strong.
This article reflects personal view of the author about the company and one must read offer prospectus and consult its financial adviser before making any investment decision
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