Transurban Group

Pricing of Private Placement:Transurban Group (ASX: TCL) is operating, owning and developing electronic toll roads and intelligent transport systems. The market capitalisation of the company stood at ~$40.8Bn as on 17^th July 2019. Recently, the company, via a release dated 27^th June 2019, announced that its financing vehicle, Transurban Finance Company Pty Limited had successfully priced €350 million private placement of senior secured 15-year notes under its Euro Medium Term Note Programme. The pricing was concluded on 26^th June 2019 and settlement occurred on 3^rd July 2019. The proceeds from the notes would be swapped into fixed rate Australian dollars and would be used for general corporate purposes and to finance the development pipeline. With respect to funding strategy, the company is managing group debt to balance cost and tenor.


Group Debts of December 2018 (Source: Company Reports)

What to Expect:The company is planning an extension of 95 Express Lanes Fredericksburg. When it comes to near term priorities, the company will be delivering its committed projects and maximise operational performance. It will also enhance customer and community offerings.

Stock Recommendation: In the update for March quarter 2019, the company had stated that, in Sydney, the New M4 tunnels are nearing completion and final commissioning works are underway. For the March 2019 quarter, Sydney ADT witnessed a rise by 2.1% to 813,000 trips. The company’s stock has posted the return of 29.13% in the span of the previous 6 months, while in the time frame of the past one month, the return stood at 4.81%. Currently, the stock is trading at close to a 52-week high level of $15.580 with higher PE multiple of 125.85x. Hence, considering the above-stated facts coupled with decent outlook and current trading levels, we maintain our “Hold” recommendation on the stock at the current market price of A$15.00 per share (up 1.01% on 17th July 2019).
 

National Australia Bank Limited

APRA’s Capital Requirement: National Australia Bank Limited (ASX: NAB) provides banking and financial related services and is having a market capitalisation of ~$78.33 Bn as on 17th July 2019. Recently, the Bank, via a release, noted the Australian Prudential Regulation Authority’s (or APRA) announcement with respect to applying the additional capital requirements to three major banks in response to risk governance self-assessments. The Australian Prudential Regulation Authority would require NAB to hold an additional $500Mn of operational risk capital. This equates to an impact of 16 basis points on Common Equity Tier 1, based on NAB’s 31^st March 2019 capital position.

The bank further noted that S&P Global Ratings revised the outlook for the major Australian banks and a range of their strategically important subsidiaries from ‘Negative’ to ‘Stable’.S&P affirmed the ‘AA-‘ long-term and 'A-1+' short-term issuer credit ratings for NAB and Bank of New Zealand. The following picture provides the broader picture of the bank’s net interest margin:


Group’s Net Interest Margin (Source: Company Reports)

Future Aspects: NAB is taking actions to address the expectations of the customer and community. NAB’s capital settings provide greater flexibility to accommodate potential earnings volatility and regulatory change. Additionally, the bank added that the productivity benefits would continue to be the key driver of the underlying profit growth.

Stock Recommendation: As per ASX, the bank’s annual dividend yield stood at 6.78%, which can be considered at respectable levels and could attract the attention of market players. Coming to the stock’s past performance, it produced the returns of 0.59% and 10.04% in the time span of one month and three months, respectively. Hence, in the view of aforesaid facts and decent outlook, we give a “Buy” recommendation on the stock at the current market price of A$26.940 per share (up 0.373% on 17th July 2019).
 

Macquarie Group Limited

Issue of New Securities: Macquarie Group Limited (ASX: MQG) is a holding company, which provides financial services. The market capitalisation of the company stood at ~$43.4 Bn as on 17 July 2019. The company recently updated that Macquarie Group Limited and its controlled bodies corporate ceased to be a substantial shareholder in Mainstream Group Holdings Limited on 11 July 2019. In the release dated July 12, 2019, Macquarie Group Limited had referred to an announcement which was made earlier in which it stated that it issued 246 shares on June 6, 2019. Therefore, as at June 30, 2019, the number of MGL ordinary shares on issue stood at 340,382,984. Additionally, it was mentioned that, as at June 30, 2019, there were 62,419 unlisted Exchangeable Shares on issue by Macquarie Capital Acquisitions (Canada) Limited, which happens to be a subsidiary of MGL, pursuant to retention agreements entered into with key Orion Financial Inc. employees shortly after Macquarie completed acquisition of Orion in December 2007.
 
 
FY19 Results Summary (Source: Company Reports)

Future Aspects: Coming to the short-term outlook, there are expectations that the Group’s result for FY 2020 is anticipated to be slightly down on FY 2019. The short-term outlook is subject to the completion rate of transactions, market conditions, impact of foreign exchange, potential regulatory changes and tax uncertainties as well as geographic composition of income.The company has a strong and conservative balance sheet and is having well matched funding profile with minimal reliance on short-term wholesale funding.

Stock Recommendation: MQG is well-placed to deliver superior performance in the medium-term with deep expertise in major markets. When it comes to stock’s past performance, it generated returns of 5.38% and 12.56% in the time span of one month and three months, respectively. As per ASX, the stock is trading slightly towards its 52-week higher price of $136.84. Hence, considering the aforesaid facts and current trading level, we give an “Expensive” recommendation on the stock at the current market price of A$128.210 per share (up 1.352% on 17th July 2019).  

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.