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    World

    Uztemiryulcontainer embarks on partial privatization process

    Uztemiryulcontainer embarks on partial privatization process

    The commencement of the partial privatization process for Uztemiryulcontainer, a prominent transportation services provider operating within Uzbekistan, has been announced. Interested parties are invited to submit their applications for the acquisition of a 35% stake in the company, with a deadline set for October 23.

    Photo: The partial privatization process for Uztemiryulcontainer, rail transport and logistics has begun.
    Source: utk.uz

    The State Asset Management Agency along with Alkes Research as the sole consultant,  has initiated the acceptance of applications for the privatization of a portion of the State's ownership in Uztemiryulcontainer.

    The privatization program, which the President approved in March, outlines the sale of the State's stake in Uztemiryulcontainer, while an additional 4% of shares in the container fleet operator are slated for purchase through a "people's IPO" program. Earlier, it was reported that AUGA had commenced preparations for the privatization of 87.7% of Uzenergoengineering, showcasing ongoing efforts to foster privatization within the country.

    Background Information on Uztemiryulcontainer

    Uztemiryulcontainer IPO has started
    Photo: Uztemiryulcontainer logo
    Source: utk.uz

    Established in 2002, Uztemiryulkonteyner, or UTYK, is a leading force in Uzbekistan's logistics sector. With a strong commitment to top-tier freight forwarding, UTYK has not only become a trusted partner for Uzbekistan Railways but has also expanded its presence across CIS nations, Europe, and Afghanistan. UTYK, the official freight forwarder of Uzbekistan Railways, has garnered a stellar reputation for its proficiency in managing export-import, transit, and domestic cargo transportation both within Uzbekistan and abroad. According to Avesta Investment Group, the company's extensive network comprises 21 strategically located logistics centers nationwide.

    UTYK offers a comprehensive range of cargo transportation services, including rail transport in containers, logistics consultation, document processing, container management, loading/unloading operations, and customs declaration. Their logistics centers perform vital functions such as loading/unloading, organizing container trains, warehouse services, customs documentation processing, technical inspections, sealing, notifications to consignees, cargo storage, loading plans, and document registration.

    International Projects and Expansion

    Avesta noted that in pursuit of business development and international cooperation, notable projects have been undertaken:

    Photo: Trans-Caspian International Transport Route
    Source: ADB
    1. Uztemiryulkonteiner's historic shipment of 46 cargo cars and 91 containers, filled with copper concentrate from Almalyk Mining, traveled 4,000 km from Uzbekistan to Bulgaria via the Trans-Caspian International Transport Route on December 16, 2022.
    2. A feasibility study for the China-Kyrgyzstan-Uzbekistan railway project was completed on May 25, 2023, with plans for a joint venture with Chinese investors to establish logistics hubs at the Uzbekistan border, aligning with the broader Uzbekistan-Kyrgyzstan-China railroad construction.
    3. On July 5, 2023, a container block train embarked from Lanzhou, China, on a 6,500 km journey through the China-Kyrgyzstan-Uzbekistan-Afghanistan route, carrying 30 containers with consumer goods, weighing over 700 tons, and estimated to take 16-18 days.
    4. Discussions in July 2023 explored container transportation possibilities on the Uzbekistan-Turkmenistan-Iran route, engaging representatives from "Vision Global Terminal" and "TULM." In August 2023, China Railway Beijing Group launched a new railway container route from northern China to Uzbekistan via Kazakhstan, promising 15-day deliveries.
    Graph showing GDp vs freight trade turnover and foreign trade turnover
    Photo: Graph showing GDP vs. freight trade turnover and foreign trade turnover
    Source: Avesta

    These strategic moves position the company to benefit from economic growth, production, regional cooperation, and foreign trade while expanding its container processing capacity.

    Financial Insights

    Financially, UTYK has shown impressive growth, Avesta reports. Its fixed assets increased fourfold in the period from 2021 to 1H2022, and the company's long-term investments in subsidiaries decreased significantly, streamlining its operations.

    While the company's revenue demonstrated a compound annual growth rate (CAGR) of 17.8% in the past four years, it managed to increase its gross margin. Earnings before interest and taxes (EBIT) saw a growth of 22%, with a healthy margin.

    Shareholder and Dividend Information

    Equity valuation and share dynamics
    Photo: Avesta forecasts the company will maintain a growth margin of 70%
    Source: Avesta

    Uzbekistan Railways holds the majority ownership with a 51% stake, while 39% was recently transferred to UzSAMA as part of the privatization process. The remaining 10% is owned by various groups, including employees, international investors, and local stakeholders. In total, the company has 3,366,271 ordinary shares listed on the RSE under the ticker UTYK, each with a par value of 1,000 UZS.

    For the past two years, UTYK has been distributing a substantial portion of its net profit as dividends, offering an attractive yield to investors.

    Equity Valuation

    Based on conservative estimates, UTYK's share price presents significant potential for growth, with expectations of exceeding UZS 300,000 per share. The company's valuation metrics, such as P/E, P/S, and P/B ratios, suggest that it is undervalued compared to industry peers, making it an appealing investment opportunity.

    Equity share price and volume dynamics
    Photo: Equity share price and volume dynamics as estimated by Avesta
    Source: Avesta

    UTYK's growth and expansion, along with its commitment to providing top-quality logistics services, position it as a key player in Uzbekistan's freight forwarding sector. With international projects on the horizon, UTYK is poised for further success in the years to come.

    How and where to apply?

    Applications, sent via email to Alkes Research, will be accepted until 18:00 (GMT+5) on October 23. Following a thorough evaluation process, qualified applicants will be invited to participate in subsequent stages of the tender. Upon signing a non-disclosure agreement, they will gain access to an information memorandum on the asset. For further details, interested parties are encouraged to visit the SAMA website.

    Alkes Research is a newly established investment and consulting firm specializing in brokerage services, investment banking support, asset trust management, and corporate governance. 

    Prospective purchasers are requested to prepare an expression of interest application, which can be submitted in Uzbek, Russian, or English. Along with the application, detailed information about the company, including its shareholders, founders, and beneficiaries, should be provided. Furthermore, it is advisable to include financial statements covering the previous three years.

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    25.09.2023, 15:07   Comments (0)   711
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