from Goldman S
Aurizon Holdings (AZJ.AX):
First Take: FY24 result - soft headline numbers; stronger FCF and buyback announced; Neutral12 August 2024 | 9:56AM AESTFY24 ResultGroup Revenue of A$3,844m was -0.5%/-0.8% vs. GSe/Visible Alpha Consensus Data.Group
EBITDA of A$1,624m was -0.8%/-1.2% vs GSe/consensus. This compares to the guidance range of A$1,590-1,680m. EBITDA margin of 42.2% was -16/-18bps vs GSe/consensus
Coal: EBITDA was ~-2.5%/-1.6% vs GSe/consensus, with margins ~-120/-81bps vs GSe/consensus and growth vs pcp of ~16% (guidance of >FY23). Tonnes hauled of 189m were ~-3% vs GSe, implying rev/tonnes hauled ~4% above. AZJ stated revenue yields improved due to customer/corridor mix (to normalise in FY25) and CPI escalations
Bulk: EBITDA was ~-4%/0% vs GSe/consensus, with margins ~+40/90bps vs GSe/consensus. Growth vs pcp of ~7% (guidance of >FY23).
Network: EBITDA was ~+3%/-1% vs GSe/consensus, with margins ~-19/+34 vs. GSe/consensus. Growth vs pcp of ~15% (guidance of >FY23).NPAT: was ~-11% vs GSe/consensus due partially to higher than expected D&A and interest (noting AZJ stated the primary driver of finance costs were almost entirely related to Network, which is notionally offset by higher revenues).FY24 DPS of 17cps was ~1.5cps below GSe/consensus. The payout ratio of ~77% (~80% for 2H24), vs 75% GSe.Free cash flow of A$661m vs +5% vs GSe A$629m (FY23 ~A$297m)
Capex was A$842m ~-4%/0% vs GSe/consensus and compares with guidance of A$600-660m non growth + A$250-300m growth.
FY25 Guidance / OutlookFY25e Underlying EBITDA expected to be A$1,660-1,740m. The guidance midpoint is ~2%/3% below GSe at A$1,738m and consensus at A$1,754m. Capex midpoint guidance is in line at A$830m vs GSe A$828m.
Coal: EBITDA to be in line with FY24 (vs GSe -1%) with higher volumes offset by lower yields and crew/maintenance costs.Bulk: EBITDA to be higher than FY24 (vs GSe +20%) with Bulk Central volume growth offsetting volume declines in Bulk West.
Network: EBITDA guidance to be higher than FY24 (vs GSe +7%) with higher regulated revenue partially offset by lower external construction works (no volume related over-recovery assumed).AZJ announced an FY25 on-market buy back of up to A$150m and is targeting an 80% NPAT payout ratio (vs GSe 88%).Valuation. We are Neutral-rated on AZJ. Our 12-m target price of A$4.05 is based on an equally weighted blend of DCF valuation and NTM EV/EBIT.
Key risks include up upgrading/downgrading FY30 Bulk target and market opportunity, lower/higher growth capex requirements, better/worse short/medium term coal outlook.
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