Transurban Group

ASX:TCL

Transurban Group

ASX:TCL
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$13.81 (+2.5%)
Last close price
#364
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2
Held by
7
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Reports (5) My Report Forum Investors
Forum Topics TCL TCL Bull Case

Pinned straw:
Parko5
Added one year ago

The Transurban SP seems to have been hit by the ACCC stopping them buying EastLink.

I think the SP drop is an over reaction. So I think it will head up again in the short / medium term,

I also note that most of the Transurban tolling concessions have built in CPI protections and well as a minimum floor rate (from memory i think CityLink was around 4%). And demand continues to grow for the use of their tollroads.

I am a bit confused what Transurban does from here. There are a few Australian tollroads comiung up that they could try to bid/buy. But I think they will have to look elsewhere. They used to have a large USA focus. I used to know Ken Daley that ran it. But he left years ago. And I don't seem to hear much what their future plans are.

I know that Scott Charlton (the ex CEO) really focused on maximising the all parts of their current assest. So it will be interesting to see what they new CEO will do.

Anyone have any thoughts on Transurban?

Cheers

Parko
Strawman
Added one year ago

I think Transurban is a perfectly good income investment @Parko5

The 4.8% yield is about on par with a term deposit, but as you rightly point out they still have decent growth options -- even if you just assume inflation-linked toll rises.

They are, of course, heavily geared, but this is secured against real and valuable assets, reasonably long dated and they have very reliable revenues. They didnt have any real issues during the GFC, for example.

I tend to think the easiest way to value these kind of assets is to add the current yield to the expected average annual increase in the dividend -- so as a rough thumb suck you could probably be reasonably confident in a 9-10% total average annual return (assuming reinvestment) or a near 5% yield where the income stream grows at 3-5%pa

Maybe it wont shoot the lights out, but it'd provide a good income stream over time.

14
Solvetheriddle
Added one year ago

@parko i believe the 4% min on citylink expired a few years back. just cpi now. i also know a few defined benefit funds like TCL because they can duration match their liabilities with the concession lengths linked with CPI, which makes sense for them. obviously huge debt load, just watch the terming of this debt versus interest rate expectations. it is solid enough, but to me, always seemed not enough yield or not enough growth, so stuck in between, no big deal. the time arbitrage of govenments, where they offer ST capex which governments want to extend the concession length (so Govt sells out the future) has been lucrative for them and probably should continue, a little less sure about the US expansion, re the bargaining power of TCL versus Oz. thats all i have.

8