TRANSURBAN GROUP (ASX: TCL)
Strong performance:TCL has recently released its quarterly report for the period ended on September 30, 2018 on October 11, 2018. 3.3% rise in the average daily traffic was reported during the quarter with 2.5% rise contributed by Sydney ADT, 5.5% rise from Melbourne ADT ,1.4% from Brisbane and 1.9% from North America. An additional acquisition of 7.15% in M5 West Motorway has been under the company’s planned schedule and this acquisition would help in raising its total equity stake to 65.39%. In FY18, the company encountered positive impacts from the growth of all the major financial metrics. 10% rise in the toll revenue up to $2.2 billion in FY18 as compared to $2 billion in FY17 was reported. The rise was further backed by the higher toll prices and growth in traffic.
Strong developmentprojects of approximately $10 billion in pipeline and a clear strategy of supporting the shareholders with the significant dividends and distribution from the free cash flow will help the company in strong growth which can be witnessed through to FY2019. Lately, the group updated about its debt financial close of WestConnex Stage 1.
Technically, the scrip has formed a bullish piercing on the charts along with higher high formations indicating bullish move in the near term to continue. Major indicators like Relative Strength Indicator and higher highs formed on the price charts point on buyers gaining hold over the sellers. The market cap of TCL was recorded at $29.98bn, with P/E of 49.43 x as on November 2, 2018. At current juncture, the scrip is trading at the price levels of $11.26. Strong growth underpinned across all markets along with projects in pipeline and higher high formation on the technical charts, exhibit an investment scenario. Further, the boost in the infrastructure sector with higher traffic rate is expected to help TCL. We give a “Buy” on this stock having 4.99% dividend yield, at the current price levels of $11.26.
BORAL LIMITED (ASX: BLD)
Decent Financials:BLD lately sold its US Block business to QuikreteHoldings, Inc. for US$156 million, subject to customary completion adjustments. Meanwhile, the group reported 13% CAGR under the proforma revenue from FY15-FY18, while gearing ratio of 30% was reported as on June 30, 2018. Divestment proceeds from Denver will further reduce the net debt from $2453m to $2281m. Group’s revenue increased to US$1656m in FY 18 from US$726m in FY17. EBITDA rose to US$284m in FY18 from US$84m in FY17. ROFE reported 2.3% rise to 4.4% in FY18 as compared to 4.3% in FY17.
Strong network presence:The company has an extensive national footprint with its networks in building flyash and products. BLD has strong relationships within the industry.
Expansion plans to grow through both traditional and non-traditional channels: Company plans to expand contracted supply through the new domestic contracts and harvesting under the traditional channel and expanding supply through new products, imports, and technology under the nontraditional channels.
The company is expecting high single-digit EBITDA growth from Boral Australia and EBITDA growth of around 20% or more from Boral North America after adjusting for the sale of the Block business. The property earning of Boral Australia is expected to increase by $20 million in FY 2019. Further, the company is expecting that earnings will grow by around 10% in USG Boral. The company is more or less on track. However, in the first quarter of FY 2019, the Infrastructure and commercial activities of Boral Australia remained strong while Boral North America witnessed some impact from adverse weather that caused significant delays in construction. This led to slight downturn in stock price.
Technically, the scrip after showing consecutive dips has now shown some retracement. Major price indicators and current levels at lower Bollinger band signify an upside in the near term. The market cap of BLD was recorded at $6.65bn, with P/E of 15.07x as on November 2, 2018. At current juncture, scrip is trading at the price levels of $5.61. Strong network presence with decent financials, and trading at lower end on bollinger as per technical charts, exhibit an investment opportunity while some short term challenges prevail. We maintain a “Buy” recommendation on the scrip at the current price levels of $5.61 while it has a dividend yield of about 4.7%.
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