Do You Know Why Qube Holdings Shares Are Surging?

  • Nov 28, 2018 AEDT
  • Team Kalkine
Do You Know Why Qube Holdings Shares Are Surging?

Qube Holdings Limited (ASX: QUB) announced a significant investment in rail infrastructure at Port Botany through its terminals business, Patrick. It comes after the NSW Ports unleashed the investment in ‘on-dock’ rail infrastructure to increase the containers capacity across the three terminals at Port Botany. The news sent Qube Holdings shares to trade at higher level. Currently, 28 November 2018 (1:20 PM AEST), QUB stock price has surged 0.375% to stand at $2.680.

NSW Ports Chief Executive Officer Marika Calfas stated that in stage 1 of the capacity enhancement, NSW Ports will invest $120 million over the coming four years. The investment is aimed to establish a new on-dock rail capacity with the target of achiveing as huge as 1 million TEC capacity at Patrick’s Port Botany Terminal. Mr. Calfas said, meanwhile the company plans to invest at the two other container terminals.

Patrick’s Chief Executive Officer Michael Jovicic said that along with NSW Ports, Patrick will invest $70 million in rail infrastructure and operating equipment to meet the targeted capacity of 1 million TEU. Patrick’s management advised that the deal with NSW Ports will enhance the productivity of its containers and will result into the increase of its terminal’s rail capacity.

Mr. Calfas stated that with the increase in the capacity of Port Botany, the exporters and importer will be able to get their product out in the market in a faster, cheaper and more sustainable way.

NSW Ports said that once fully operational, the investment bring down the increase in truck movements around the port as the distance travelled by trucks in Sydney will reduced by at least 10 million kilometers per year.

To fund the investment, NSW Ports will reportedly increase the wharfage fees by marginal $3.08 from 1 July 2019. It reflects the spread over the long term so that the company can minimise the increase in wharfage fees applied on full imports and exports and remove the same once the cost of the investment has been recovered.

Qube’s Patrick is into the business of handling heavy volume containers through railways and focuses on growing and optimizing its rail offering. Rail operation at Patrick are anticipated to remain in place at the time of construction. Further, it has been stated that work will start in 2019, which slated to be completed by 2023.

Over the past one year, the stock of Qube Holdings Limited has witnessed a positive performance change of 4.30%. Currently, QUB stock is trading at a PE of 21.360 x with market capitalization of $4.29 billion.


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