Transurban Group
Growth underpinned across all markets: Transurban Group (ASX: TCL) recently released the update for the September 2018 quarter. The company witnessed a rise of 3.3% in the average daily traffic or ADT which was supported by the growth in all the markets. It managed to reach a financial close in regard to the acquisition of 8.24% stake in M5 West Motorway in September 2018. It might interest the market participants that this was an additional interest which the company has acquired and, as a result, the total equity interest now stood at 58.24%.
Transurban’s core capabilities (Source: Company Reports)
However, the company also plans to make an additional acquisition of 7.15% in M5 West Motorway which would raise its total equity stake to 65.39%. In FY 2018, Transurban witnessed the positive impacts by the growth in all the major financial metrics. The company generated toll revenues amounting to $2.2 billion in FY 2018 representing an increase, as in FY 2017 it was $2 billion. This rise was underpinned by higher toll prices as well as traffic growth. However, after the financial close, A25 also contributed to the company’s toll revenues.
Higher distributions to help Transurban in FY 2019: The management of Transurban Group stated that the shareholders can expect the distribution of 59.0 cents per share in FY 2019 which represents the YoY growth of 5.4%. The company has a clear aim of supporting the shareholders with the dividends and also believes that it could go for distributing circa 100% of the FCF or free cash flow. However, this is expected over-time and not immediately. Apart from this, Transurban stated that the development projects amounting to $10 billion in the pipeline are expected to witness progress in FY 2019.
Technical Overview on stock: On Transurban, Moving Average Convergence Divergence (MACD) indicator has been applied on the daily chart and default values have been considered. As per the observation, the MACD line has crossed the signal line and is moving upwards. Therefore, the crossover could be termed as bullish crossover. As a result, we maintain a “Buy” rating on the stock at the current price of $11.120.
SCENTRE GROUP
Demand for retail space helped the group: Scentre Group (ASX: SCG) completed half year ending June 2018 by generating funds from operations or FFO amounting to $657 million. During the same period, the company saw profits amounting to $1.46 billion. The company’s management stated that its portfolio witnessed the positive impact as high-quality retail space coupled with increased traffic flow has witnessed robust demand. However, the company’s customer-centric approach as well as immediate actions on the feedback of the customers has been encountering significant progress.
Specialty in-store sales growth (region-wise) (Source: Company Reports)
Let’s look at the developments done by Scentre Group - The company has initiated the redevelopment of Westfield Newmarket in 2018 which involves consideration amounting to NZ$790 million and the share of SCG is of NZ$400 million. In 2018, the company is expecting to get done with the developments amounting to $1.1 billion of which SCG share is $810 million.
Scentre to deliver FFO growth of 4% moving forward: Scentre is expected to experience fund from operations or FFO growth of circa 4% for the full year 2018 (12 months ending).However, the company’s management stated that in 2018 distributions might be 22.16 cents per share implying a rise of 2%. Additionally, for FY 2018, the company expects comparable NOI growth in the range of 2.5%-3% while its weighted average interest rate is expected to be at around 4.4%.
What does Scentre’s chart say: On the daily chart of Scentre Limited, MACD indicator has been applied and the default values have been incorporated.As per the observation, MACD line has crossed the signal line and is moving upwards representing the trend as a bullish crossover. As a result, we maintain a “Buy” rating on the stock at the current price of $ 3.890.
Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.