Tallink Group reported January traffic volumes on February 5, showing a 13.6% decline y/y. While this was well below our expectations, the reasons were mostly to do with maintenance and chartering.
Swedbank quick comment: Tallink monthly sales
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We estimate that due to the scheduled maintenance periods of the cruise ferries Baltic Princess and Baltic Queen and the shuttle Star and the chartering of cruise ferries Victoria I and Silja Festival, Tallink Group’s operational capacity was slightly more than 10% lower compared to last year.
We calculate that the Estonia-Finland route and the Estonia-Sweden route maintained their efficiencies in terms of passengers per trip. While Tallink had less capacity available on the Finland-Sweden route, the 20% decline in passengers was also affected by the launch of the Viking Grace ship in mid- January by Tallink’s largest competitor. At the beginning of February, Tallink sent one of its newest cruise ferries, Baltic Princess, to the Turku-Stockholm route, which should become the second-newest ship on the route after Viking Grace. In return, Tallink’s largest ferry, Silja Europa, was sent to the Tallinn- Helsinki route
In terms of cargo, the decreases were less severe, with the exception of the Estonia-Finland route. The 25.7% decline y/y is mostly explained by a high base, as in January 2012, cargo volumes on the route reached a record level due to one of the largest competing cargo vessels, Eckerö’s Nordlandia, not operating for almost the entire month. Compared to January 2011, Tallink’s cargo volumes on the route were 14% higher.
Two of the group’s vessels, Victoria I and Silja Festival, were on charter for a 7.6% week in St Petersburg, taken from the Estonia-Sweden and Latvia-Sweden routes. We expect the negative effect of lower revenues on the two routes to be offset by higher chartering revenues.
We make only minor changes to our estimates after the month’s data, bring- ing 2013e EBITDA to EUR 158m (EUR 161m). We maintain our target price of EUR 1.00 and Buy recommendation as the month’s data did not have a large impact on the company’s outlook.
Recommendation: Buy
Target Price: EUR 1.00
Share price: EUR 0.91