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TCL

Transurban Group FY19 Results

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

Transurban Group (ASX:TCL) has released their FY19 financial results this morning, reporting EBITDA up 21% to $1,996m in line with market expectations. However, TCL has also announced plans of an equity raise of $500m in order to purchase the remaining 34.62% of the M5 West, taking TCL’s ownership to 100%.

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Transurban Group is a global toll road operator with investments in Melbourne, Sydney, Brisbane, the United States and Canada, consisting of 17 roads servicing 8.5 million customers. The Company’s investments are intended to guarantee future returns for as long as 10-20 years, as toll roads remain an integral aspect of infrastructure that supports domestic commerce.

 

What was the outcome of Transurban Group's FY19 results? 

TCL has also reported a 63.7% decline in NPAT from ordinary activities to $170m. This is due to $295m worth of stamp duty costs associated with the expansion of TCLs WestConnex project, as well as increased finance costs, lower income tax benefits and an increase in the depreciation of new assets. Despite this the Company has seen toll revenue increase 10.3% over FY19 as well as a daily increase in traffic flows of 2%. In addition to this TCL finished four infrastructure projects over FY19, with a further three expected to be finished in FY20 adding to TCLs revenue base.

The $500m TCL has announced it will raise to purchase the remaining 34.62% of the M5 West, will be done through an institutional placement at an offer price of $14.70. Ownership of the M5 West will allow TCL  to take advantage of its WestConnex project linking its M4 and M5 operations, the M5 road is also expected to see daily traffic flows grow 5.6% over the next five years. The M5 also has existing E-way payment infrastructure with 500, 000 customers, allowing TCL to generate sustained revenue from the M5 without additional costs.

 

What is the long-term outlook for Transurban Group?

The Company has announced its dividend guidance for FY20 at 62 cents per security up from 59 cps for FY19. Accordingly, as TCL investments have a projected long period of sustained returns current capital raising should not be a concern for investors.

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978) (“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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