Transurban Group

About the author:

Nathan Lead
Author name:
By Nathan Lead
Job title:
Senior Analyst
Date posted:
14 February 2014, 8:17 AM
Sectors Covered:
Infrastructure, Utilities

Transurban Group (TCL) have posted a strong 1H14 result on the back of solid growth.

Key takeaways from the result

  • Dividend per share (DPS) guidance for FY14 upgraded from 34 to 35 cps, driven by strong traffic growth in the north-west corridor of Sydney.
  • Management incentive package aligns with double-digit DPS growth across FY14-16. That's the fastest in the sector by far. For the next 12 months, estimated yield is 5.4%, or 5.9% grossed-up.
  • It's not all smooth sailing. One of TCL's North American roads is underperforming, and requires an equity injection from TCL and its partners. This is the second road to disappoint in the USA, but it's not a big part of their asset portfolio.
  • TCL advised they may need to raise capital if they win the bid for Queensland Motorways, with a preference for an entitlement offer. Fingers crossed TCL wins the bid at a reasonable price and we can participate. Exposure to the Brisbane toll roads would be of considerable benefit.

More information

Transurban Group is a good story and a stock worth adding to portfolios. If you are interested in finding out more about TCL please contact your nearest Morgans office.

Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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