Transurban’s FY19 Results Out; A Look at Three Other Stocks in Industrial Space – BXB, AZJ, CIM

  • Aug 08, 2019 AEST
  • Team Kalkine
Transurban’s FY19 Results Out; A Look at Three Other Stocks in Industrial Space – BXB, AZJ, CIM

Transurban Group (ASX: TCL), one of the largest toll-road operators across the world, designs roads that deliver real and long-term benefits to cities and their communities. At present, the group has 17 toll roads in Australia (Brisbane, Melbourne and Sydney) and North America (Greater Washington Area and Montreal). The group is persistent in seeking ways to make travelling convenient for people by using technology to build more efficient roads and create a better customer experience.

Lately, Transurban Group has released multiple updates on the Australian Stock Exchange, including its FY19 results, M5 West Acquisition, distribution guidance for FY20, a $500 million Placement and SPP (Security Purchase Plan). Let us take a look at each one of these updates in some detail:

Transurban’s FY19 Results

Statutory Results: The group reported a rise of 26.3 per cent in its statutory revenue from ordinary activities to $4,166 million in FY19 (FY18: $3,298 million). The Net profit of the group declined by 63.7 per cent to $170 million, while the EBITDA improved by 21 per cent to $1,996 million. The 21 per cent rise in EBITDA comprises of $109 million increase driven by toll revenue growth, and lower cost growth net of other revenue, and $238 million increase impacted largely from A25 and consolidation of M5 West.

Source: Company’s Presentation (7th August 2019)

Proportional Results: The group’s proportional toll revenue rose 10.3 per cent in FY19 to $2,581 million from $2,340 million in FY18. The increase in toll revenue was driven by traffic and revenue growth across the existing Australian and North American networks and an increase from new assets and higher ownership in M5 West. The proportional EBITDA excluding significant items also improved by 12.3 per cent to $2,016 million during the period.

M5 West Acquisition

The group informed that it has acquired the remaining 34.62 per cent minority interests in M5 West, funded by a ‘pro-rata’ institutional placement and Security Purchase Plan. The 34.62 per cent interest has been acquired for $468 million, taking the group’s total ownership to 100 per cent. M5 West is an existing asset of the group with a 27-year operating history. The group expects the acquisition transaction to be cash flow free and value accretive by ~3 cents per security (including equity raising) in FY20, reinforcing distribution free cash coverage.

The group informed that the 100 per cent ownership enables:

  • Realisation of the operational synergies.
  • M5 West to become a part of the Transurban Holdings Limited (THL) tax consolidated group. M5 West will no longer pay tax separately, and its taxable income will be balanced against the taxable losses within THL.

To fund the M5 West’s complete acquisition, the group will raise capital under the Placement and Security Purchase Plan whose details are mentioned below:

Institutional Placement

As announced on 8 August, the group has raised $500 million (1.3 per cent of total outstanding securities) through a fully underwritten ‘pro-rata’ institutional placement at an offer price of $14.70. The placement price represents 3.48 per cent discount to Transurban’s closing price of $15.23 on 6 August 2019. The group mentioned that new securities issued under the Placement will rank equally with ordinary securities from the date of allotment. They are not entitled to the FY19 final distribution of 30.0 cents per security.

Security Purchase Plan

The group also has a Security Purchase Plan (SPP) in place for raising a capital of up to $200 million. Under the non-underwritten SPP, the eligible security holders will be offered to subscribe for up to $15k of new securities per security holder, free of brokerage and transaction costs. The new securities will be issued at the 2 per cent discount to the 5-day Volume Weighted Average Price of the group’s securities up to the SPP closing date or the Placement price, whichever is lower.

Distribution Guidance for FY20

The group has also released its distribution guidance of 62 cents per share for FY20 that includes 4 cents per share of fully franked distribution. The FY20 distribution guidance represents a growth of 5.1 per cent over FY19 distribution.

Recently, the group has also announced a distribution amounting to 30 cents per share for a period of six months, payable on 9 August 2019. The 30 cents per share of distribution consisted of 2 cents per share of fully franked dividend from THL and controlled entities and 28 cents per share of distribution from Transurban Holding Trust and the regulated entities. The group also offered a Dividend Reinvestment Plan (DRP) with a DRP Price of AUD 15.15490.

Stock Performance

TCL is currently trading at AUD 15.230, 1.5% down on 8 August 2019 (12:57 PM AEST). TCL has delivered a return of 31.86 per cent on a YTD basis.

In order to strengthen the communities through transport, Transurban provides sustainable transport solutions that offer choice, reliability, safety, transparency and value. Besides Transurban, there are many other industrial companies listed on the ASX that are also catering to the infrastructure space. Let us take a look at few of these companies below:

Brambles Limited

Sydney-headquartered supply-chain logistics company, Brambles Limited (ASX: BXB) manages the largest pool of reusable crates, pallets and containers across the world. Globally, the biggest brands trust the company to assist them to transport their products more sustainably, efficiently and safely.

In June this year, the company entered into a binding agreement with Triton and a subsidiary of the ADIA (Abu Dhabi Investment Authority) for the sale of its IFCO reusable plastic containers business for an enterprise value of US$2.51billion.

During the nine months of the year ending 30 June 2019, Brambles anticipates its sales revenue from continuing operations to be at US$3,409.0 million, 7 per cent up on the pcp at constant FX rates. Brambles expects a modest improvement in constant-currency Underlying Profit growth in FY19.

BXB is currently trading at AUD 12.900 on 8 August (12:57 PM AEST). The stock has generated a YTD return of 29.46 per cent.

Aurizon Holdings Limited

The largest rail freight operator of Australia, Aurizon Holdings Limited (ASX: AZJ) transports over 250 million tonnes of Australian commodities every year. The company provides integrated logistics and freight solutions via an extensive national rail and road network, passing through Australia.

On 26th July 2019, the company informed through an ASX update that an appeal has been lodged by customers challenging the Supreme Court of Queensland’s decision that came in favour of the company for the Wiggins Island Rail Project. In June 2019, Supreme Court of Queensland confirmed Aurizon’s ability to charge regulatory fees opposed by customers under the project. Aurizon notified that it is considering the appeal and will reply as per the Court of Appeal instructed timeframes.

In February 2019, the company reported an Underlying EBIT in its continuing operations of $406 million for the half-year ended 31 December 2018, which was 16 per cent lower than the pcp. Its Statutory NPAT from continuing operations was also 19 per cent down on pcp at $227 million.

AZJ is currently trading at AUD 5.765 with a rise of 0.96 per cent. AZJ has delivered a return of 28.03 per cent, 17.01 per cent and 4.01 per cent in the last six months, three months and one month respectively.

CIMIC Group Limited

A leader in mining, services, engineering-led construction and public private partnerships, CIMIC Group Limited (ASX: CIM) operates diversified businesses, including mining and mineral processing, construction, public private partnerships, operation and maintenance services and engineering. The group offers innovative and competitive solutions to its clients across various areas.

The group has recently announced a fully franked dividend amounting to 71 cents for a period of six months, payable on 3rd October 2019. The ordinary fully paid dividend carries a record date and ex-date of 12th and 11th September 2019 respectively.

CIMIC group reported an NPAT of $367 million for the six months to 30 June 2019 in July this year. The group mentioned that its EBIT, NPAT and PBT margins were stable at 8.2 per cent, 5.3 per cent and 7.2 per cent, respectively during the period. The group expects its FY19 NPAT to be between $790 m and $840 m.

CIM is currently trading at AUD 33.015, down by 1.74 per cent compared to the last closed price. The stock has delivered a negative return of 21.44 per cent on a YTD basis.


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