We downgrade our fiscal 2024 proportional EBITDA forecast for wide-moat Transurban by a few percent as traffic volumes in the year to date are softer than we expected. Longer-term forecasts are largely unchanged—we continue to forecast a five-year EBITDA compound annual growth rate of about 7%. We maintain our AUD 12.50 per share fair value estimate and consider the stock to be fairly valued, offering a mostly unfranked yield of 4.8%.
Core Australian roads generate defensive revenue that grows with traffic volumes and toll price increases, which are at a minimum pegged to inflation. Solid revenue growth and a high fixed-cost base translate to strong cash flow and distribution growth.
Building and acquiring new roads can destroy equity value as a result of overbidding and overly optimistic traffic forecasts.
|
Metric
|
TCL
|
ALX
|
AIA
|
|---|---|---|---|
Price/Earnings (Normalized) | 152.97 | 24.04 | 69.59 |
Price/Book Value | 3.25 | 2.31 | 1.31 |
Price/Sales | 9.01 | 58.38 | 15.06 |
Price/Cash Flow | 25.32 | 102.86 | 27.94 |
|
Metric
|
TCL
|
ALX
|
AIA
|
|---|---|---|---|
Quick Ratio | 0.49 | 2.88 | 0.27 |
Current Ratio | 0.53 | 2.90 | 0.28 |
Interest Coverage | 1.14 | 3.32 | 2.75 |
|
Metric
|
TCL
|
ALX
|
AIA
|
|---|---|---|---|
Return on Assets (Normalized) | 0.71% | 3.11% | 1.09% |
Return on Equity (Normalized) | 2.11% | 4.69% | 1.42% |
Return on Invested Capital (Normalized) | 2.08% | 3.88% | 0.90% |
|
Ticker
|
Name
|
Morningstar Rating for Stocks
|
Capital Allocation
|
Economic Moat
|
Market Cap
|
|---|---|---|---|---|---|
FER
| Ferrovial SE | — | Jth | $29.1 Bil | |
TRAUF
| Transurban Group | — | Mknjh | $25.7 Bil | |
JEXYF
| Jiangsu Expressway Co Ltd Class H | — | Wcwf | $7.4 Bil | |
JEXYY
| Jiangsu Expressway Co Ltd ADR | — | Vkhyl | $7.3 Bil | |
MAQAF
| Atlas Arteria Ltd | — | Hszkc | $5.2 Bil | |
VRRM
| Verra Mobility Corp Class A | — | Ckysftv | $4.6 Bil | |
PUODY
| Promotora Y Operadora de Infraestructura SAB de CV ADR | — | Whz | $4.1 Bil | |
ZHEXF
| Zhejiang Expressway Co Ltd Class H | — | Dmnr | $4.0 Bil | |
SHZNY
| Shenzhen Expressway Corp Ltd ADR | — | Vtlq | $2.8 Bil | |
PTJSY
| PT Jasa Marga (Persero) Tbk ADR | — | Xfyd | $2.3 Bil |
