Four Stocks in Industrial Space - ALX, TCL, EHL, AIA

  • Jan 30, 2020 AEDT
  • Team Kalkine
Four Stocks in Industrial Space - ALX, TCL, EHL, AIA

Industrial sector comprises of companies engaged in the manufacturing and sale of machinery, equipment and supplies that are primarily used to manufacture other goods.

The industrial sector can be divided into two parts: heavy industry and light industry. Generally, this sector is engaged in the processing of raw materials into finished products.

Some examples of industrial sector segments are:

  • Chemical industry
  • Consumer electronics
  • Industrial equipment
  • Automobile industry
  • Steel production
  • Tobacco industry

On 30 January 2020 (AEDT 03:20 PM), S&P/ASX200 Industrials (Sector) was trading in red, declining by 75.5 points or 1.07% to 7,074.6. Let’s look at four industrial stocks and their recent updates.

Atlas Arteria (ASX: ALX)

Atlas Arteria is an international operator and developer of toll roads. The roads that the company operates, develops and invests in, help people through greater time certainty, decreased travel time, and lowered fuel consumption and carbon emissions. Its portfolio includes APRR, ADELAC, Warnow Tunnel and Dulles Greenway.

Q4 Average Toll Revenue and Weighted Average Traffic Up Over 6%

The company, on 29 January 2020, released its toll revenue and traffic statistics for the December 2019 quarter. In Q4 2019, weighted average toll revenue grew by 6.6% compared to pcp and weighted average traffic went up by 6.2% year-on-year. This result shows robust quarterly traffic at APRR as compared to weaker conditions in the same period a year ago (Q4 2018) that were affected by the Gilets Jaunes (Yellow Vests).

The weighted average toll revenue and traffic registered a year on year increase of 2.6% and 0.7%, respectively, for the 12 months period ended 31 December 2019.

Key Highlights:

  • APRR Revenue and traffic for Q4 2019 grew by 7.7% and 7.8% year on year, respectively, on the back of a strong performance in light vehicle traffic;
  • Traffic on the Dulles Greenway was 5.1% lower in the December 2019 quarter when compared with the same period a year;
  • Revenue from Warnow Tunnel for Q4 2019 increased by 8.8% compared to pcp, and traffic grew by 5.6% year on year.

APRR Successfully Prices €500 Million of Eurobonds

APRR has successfully priced €500 million of bonds under its Euro Medium Term Note Programme. The bonds, which would be ranked equally with APRR’s existing bonds on issue, have a period of 3 years with maturity scheduled on 20 January 2023, a year in which this segment currently has no bonds maturing.

The company plans to direct the proceeds towards refinancing debt and for general corporate purposes. The bonds were priced at 100.231% of face value with a zero coupon, reflecting a margin of 18bp over mid-rate swaps and a negative yield to maturity of minus 7.7bp.

Stock Performance

The stock of ALX was trading at $8.090 per share on 30 January 2020 (AEDT 03:22 PM), down by 0.736% from its previous closing price with a market capitalisation of $7.16 billion. The total outstanding shares of the company stood at 879.02 million, while its 52-week low and high was noted at $6.311 and $8.447, respectively. The stock has given a total return of 2.58% and -0.50% in the time period of last 3 months and 6 months, respectively.

Transurban Group (ASX: TCL)

Transurban Group is the operator, owner and developer of intelligent transport systems and electronic toll roads.

Update on West Gate Tunnel Project

Transurban WGT Co Pty Ltd has received a document from the CPBJH Joint Venture entitled “West Gate Tunnel Project: Termination of the D&C Subcontract on the basis of a Force Majeure Termination Event”, concerning the problems in respect of the presence, classification and disposal of per and polyfluorinated alkyl substances (PFAS) within the project site and which purports to terminate the D&C Subcontract.

The company has instructed the CPBJH Joint Venture that it does not believe the D&C subcontract has been reasonably concluded and, as such, the contract stays valid. In the document, despite the purported termination of the D&C Subcontract, the CPBJH JV states its intention to continue works on site.

Refinancing Updates

Recently, the company announced that Hills M2 Motorway, a 100% owned subsidiary of TCL, raised $403 million in non-recourse debt through a new debt facility of a 12 months term. Moreover, the company’s financing vehicle, Transurban Finance Company Pty Limited, successfully refinanced its existing $1,650 million corporate syndicated bank debt facility. The new facility comprises two tranches of $825 million with tenors of 3 and 5 years, respectively.

Stock Performance

The stock of TCL was trading at $15.755 per share on 30 January 2020 (AEDT 03:43 PM), down by 1.284% from its previous closing price. The company has a market capitalisation of $43.62 billion. The total outstanding shares of the company stood at 2.73 billion, and its 52-week low and high was noted at $11.895 and $16.090, respectively. The stock has given a total return of 8.50% and 2.57% in the time period of last 3 months and 6 months, respectively.

Emeco Holdings Limited (ASX: EHL)

Emeco Holdings Limited has operations in all key mining regions of Australia and its customers include mining companies and contractors across gold, bauxite, copper, coal and iron ore. Founded in 1972, the company is engaged in the sale and maintenance as well as renting heavy earthmoving equipment.

Senior Management Team Changes

The company, on 29 January 2020, announced some changes to its senior management team to position EHL for long-term growth and continued success. Its current Chief Financial Officer, Ms Justine Lea, would be appointed to a newly created role of Chief Integration Officer and tasked with the financial and operational integration of the Pit N Portal acquisition as well as other ongoing business improvement initiatives to support the company’s next phase of growth.

Also, Mr Neil Siford would be appointed as CFO of Emeco. Mr Siford holds a vast experience of more than 30 years, including 20 years in corporate senior finance roles. He is expected to aid in positioning Emeco for long-term growth and success.

Stock Performance

The stock of EHL last traded at $2.300 per share on 24 January 2020. The company has a market capitalisation of $743.39 million. The total outstanding shares of the company stood at 323.21 million. The stock has given a total return of 19.79% and -3.36% in the time period of last 3 months and 6 months, respectively.

Auckland International Airport Limited (ASX: AIA)

AIA is the 3rd busiest international airport in the Australasia region, as over 75% of all visitors (international) to New Zealand arrive at the airport. In the past 12 months, more than 20.5 million passengers have travelled through the airport’s terminals.

Passenger Numbers Decline in November 2019 Traffic Update

On 29 January 2020, the company released November 2019 monthly traffic update. Its total passenger numbers declined by 1.5% in November 2019 as compared to the previous year. International passengers (excluding Transits) declined by 1.4%, transit passenger volumes fell by 6.7% and domestic passengers went down by 1.0%.

Key Highlights:

  • Decrease in transit passengers for November 2019 was mainly due to LATAM Airlines decreasing its Santiago-Auckland-Sydney service to four per week from daily;
  • Growth in Korean visitor arrivals up 3.7% in November 2019 versus last year, on the back of additional capacity from Korean Air upgauging to B747 aircraft.

Stock Performance

The stock of AIA was trading at $8.290 per share on 30 January 2020 (AEDT 03:54 PM), down by 0.837% from its previous closing price. The company has a market capitalisation of $10.16 billion. The total outstanding shares of the company stood at 1.22 billion with its 52-week low and high noted at $6.900 and $9.450, respectively. The stock has given a total return of -2.68% and -8.23% in the time period of last 3 months and 6 months, respectively.


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