The next level for Boral Limited (ASX: BLD) And Transurban Group (ASX: TCL)

The next level for Boral Limited (ASX: BLD) And Transurban Group (ASX: TCL)

Boral Limited (ASX: BLD)

Building products and construction material group, Boral Limited operates through its three core divisions- Boral Australia, Boral North America and USG Boral.

The group has experienced significant growth in its Boral North America division with strong and improving EBITDA margins nearing 18% during the six months ended 31 December 2018. The growth outlines the encouraging price movement and the acquisition of Headwaters, which led to further synergies of US$14 million in 1HFY19 in addition to US$39 million already delivered.

On the back of Boral North America success, the company expects to deliver higher EBITDA in Fiscal 2019 relative to the previous corresponding period.

FY2019 outlook on the divisional performance of each segment is projected as follows:

Boral Australia: This division is expected to deliver almost the same EBITDA as in the previous year, excluding property earnings. FY2019 Property earnings are reportedly expected to be around $30 million in comparison to $63 million reported in FY2018.

Boral North America: For the full fiscal year 2019, Boral North America division is expected to deliver EBITDA growth of ~15% in USD, including Headwaters acquisition synergies of ~US$25 million in FY2019. Besides, volume growth and operational improvements are stated to form the two integral components of growth.

USG Boral: The company eyes lower profit in USG Boral in FY19 in comparison to FY2018, due to a decline in residential construction activity in South Korea and demand in the Australian business holding up. However, BLD is advancing its plasterboard business within the division, but it is estimated to show no material impact in FY2019.

Listed in 2000, BLD stock last traded at $5.230, down 0.191%, on 24 May 2019. The stock last traded at a price to earnings multiple of 12.180x with a market capitalisation of $6.14 billion as at the same date.

Transurban Group (ASX: TCL)

Transurban Group is an ASX-listed industrial sector company that owns and operates toll roads in many parts of Australia and North America. In the latest market announcement, the company declared the distribution of 30.0 cents per security for the six months ending 30 June 2019, taking FY2019 total distribution to 59.0 cents per stapled security.

This follows a 2.3% increase in Average Daily Traffic (ADT), with growth achieved across all markets during the March 2019 quarter. The growth outlines an attractive traffic performance in Melbourne with car traffic up by 2.5% and large vehicle traffic up by 5.6% during the quarter. Melbourne, Sydney and North America have been other key contributors to the group’s ADT.

The record date of the above-stated distribution has been fixed to 28 June 2019 with payment scheduled to be made on 9 August 2019.

Looking forward, Transurban expects a mid-single digit distribution percentage growth in FY2020. On the project front, the company anticipates completing five projects by FY2021 and a further four by FY2024, supporting ongoing distribution growth.

TCL stock dropped by 0.433% to close at $13.800 on 24 May 2019. Its price to earnings multiple stood at 117.460x with a market capitalisation of $37.08 billion.


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