Transurban takes its toll with new Brisbane network
TRANSURBAN Group, Australia’s biggest toll road operator, has posted a 64 per cent jump in December quarter toll revenue to $373 million.
TRANSURBAN Group, Australia’s biggest toll road operator, has posted a 64 per cent jump in December quarter toll revenue to $373 million, helped by strong traffic growth across existing projects and its big-ticket acquisition of Queensland Motorways earlier this year.
Its proportional toll revenue — or revenue adjusted to the proportion of its stake in various projects, rose 37 per cent in the quarter, to $385.4m. The company cites proportional toll revenue as the most accurate reflection of its performance.
Proportional toll revenue for the half-year ended December 31 rose 36.7 per cent from the same period in the previous year, to $760.6m.
Transurban, which owns toll roads in Australia’s largest cities, and projects in the US, reported strong traffic growth for the December quarter.
Traffic at its Sydney assets rose by an average of 9 per cent at its Westlink M7, Lane Cove tunnel and Hills M2 motorway projects, while Melbourne’s CityLink toll road also generated higher collections on a 3.2 per cent increase in traffic.
CityLink remains Transurban’s biggest revenue spinner, generating $288.8m during the December half. This was followed by the Hills M2 motorway which generated $110.3m for Transurban as the motorway averaged more than 118,000 trips a day. Sydney’s Cross City Tunnel saw tolling revenue and car trips drop during the half-year, averaging just 36,600 trips a day.
Transurban opened a new US toll road near Washington DC in December, while traffic on another US road, the 495 Express Lanes, rose 16.4 per cent over the quarter.
The December quarter numbers also reflect the additional revenues from its Brisbane road network, which it acquired in July as part of Queensland Motorways. The $7 billion acquisition was the biggest M&A deal in Australia in 2014. Transurban owns 62.5 per cent stake in Queensland Motorways.
Transurban raised $2.7bn from shareholders in May 2014, including a $400m placement, to fund the deal. It also tapped the European debt market during the year.
Shares in the company closed slightly higher on Wednesday at $8.83 each, but the stock has jumped by nearly a third in the past 12 months. It touched a peak of $9.03 in December. Last month, Merrill Lynch lifted its price target on the toll road operator to $9.15 a share after assessing traffic flows at its new NorthConnex project in Sydney, which will open in 2019.
Since then, however, analysts have turned more bullish on the stock as global crude oil prices have collapsed in the past few weeks. The nearly 60 per cent slump in oil prices from their peak levels in 2014 has meant sharply lower petrol prices for motorists. This, along with long-term growth in the urban population and car usage is seen as beneficial to transport-related companies such as Transurban.
Transurban has 11 roads in its Australian portfolio. It has upgraded the M2 and recently widened the M5 in Sydney. It has also upgraded and widened sections of CityLink in Melbourne.
Business Spectator
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