Transurban Group (ASX: TCL)

Good opportunities in place: Transurban, which is Australia’s largest builder and operator of toll road networks started 2018 with some bolt-on contracts. The kitty was recently upgraded with an agreement with Macquarie Infrastructure Partners to acquire 100% of the equity interests in the A25, located in the Montreal metropolitan area for CAD 840m plus transaction costs of CAD 18m. Further, Virginia Department of Transportation (VDOT) has accepted the group’s offer to extend the I-95 Express Lanes to Fredericksburg under the existing 95 Express Lanes concession agreement; and financial close on the US$565m project is scheduled for the first half of 2019. Then, the Victorian House of Parliament revoking the Planning Scheme Amendment (PSA) for the West Gate Tunnel Project and intending to reissue planning approval for the Project allowing major construction work to recommence, was noted. Meanwhile, the interim result for the half-year ended 31 December 2017 was decent with good toll revenue growth across all networks and interim dividend of 28 cents, compared with 25 cents of prior corresponding year. Overall, TCL has good pipeline of growth projects worth about $11 billion and can benefit from further opportunities based on attractive demographics and economic growth. It has also given a 8.7% growth guidance for FY18 distributions. We have a “Buy” on the stock at the current price of $11.43
 

Committed Pipeline (Source: Company Reports)
 

Ramsay Health Care Ltd (ASX: RHC)

Multiple levers of Growth: Ramsay Health Care is expected to be benefiting from rapidly ageing and growing population. The decent 1H 2018 result with 7.5% rise in Core net profit after tax to $288.0 million and revenue growth of 3.0% to $4.4 billion, reinforces the drive. The group’s earnings have been up at the back of strong performance in the Australian business driven by above market volume growth and the benefits of recent cost efficiency programs. The increasing proportion of people with chronic disease and mental illness has been behind the treatment volumes. RHC has thus reaffirmed the FY18 Core EPS growth of 8% to 10%. While there are challenges for the group in Europe, the company’s efforts on major transformation project in relation to French Operations are expected to pave path for long term potential with support from the Australian business. While we see directors either acquiring or disposing the securities of the group (with a downward stock price movement of 6.27% in last one month), we have a “Buy” recommendation on the stock at the current price of $62.61, given the potential the group possesses with completion of Brownfields projects, and strengthening of Pharmacy Franchise Network.
 

Dividend Growth (Source: Company Reports)
 

APA Group (ASX: APA)

Benefits expected from growth investment projects: APA is Australia’s largest owner and operator of gas pipelines, and has a favourable outlook for gas consumption at the back of the move towards lower-emission fuels. While, the 1H FY18 result entailed NPAT slipping by 11.3% to $124m and revenue edged slightly up, the group still managed to declare interim dividend of 21 cents, compared with 20.5 cents last year. Meanwhile, APA Group announced that it had entered into a new agreement for gas transportation and storage services from Qld to southern markets and expects to earn total revenues in the order of $40m over the contracted period of 3 years from 2018. APA has recently completed the retail shortfall bookbuild of new Company’s stapled securities (Retail Shortfall Bookbuild) for the retail component of its fully underwritten 1 for 17 pro-rata accelerated institutional tradeable retail renounceable entitlement offer. The directors of the company are now noted to acquire the group’s shares. The group expects revenue to increase from growth investment projects through FY19 and FY20. We give a “Hold” on the stock at the current price of $7.89
 

Committed Projects (Source: Company Reports)

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