Higher margins to offset decline in throughput: Noting the 1H13 results, Drewry Maritime Equity Research have revised FY13e revenues downwards from USD 3.31bn to USD 3.22bn, owing to moderating volume growth in EMEA and Asia/ISC region. Drewry expect consolidated throughput to record a CAGR of 4.5% during FY12-F15e, compared with 5.7% estimated earlier. Conversely, the company's focus to handle O&D cargo and better cost control resulted in higher than expected EBITDA margin in 1H13. Drewry think that margins will gradually expand during FY12-15e, and this will drive earnings growth. Also expected is a net income of 30%, which translates into a yield of 1.7% for FY13e.

Healthy balance sheet strengthened by monetisation of assets. The company's balance sheet was bolstered by monetisation of assets such as in Hong Kong and Vostochny. The capital expenditure will reduce from FY15e onwards upon completion of London Gateway and expansion at Jebel Ali. Net gearing is expected to reduce from 36% in FY12 to 21% in FY15e, according to Drewry estimates.

In accordance with the revised forecasts, Drewry have raised our fair value estimate to USD 15.8 per share from USD 15.1 per share estimated earlier, based on discounted cash flow valuation. This reflects that the stock is fairly valued at current levels (USD 15.5 per share) as it has shored up ~35% YTD, and is trading at 12-month rolling EV/EBITDA multiple of 9.9x compared with the long term average of 11x. Key catalysts are operational performance at London Gateway, and political stability in the Middle East. DP World scores an orange light on value, and green light on risk metrics according to Drewry’s bespoke value/risk ranking, indicating Neutral Valuation and Low Risk.