1) Traffic growth has been a bit weak (+2.2% ADT growth YoY, vis-a-vis +4.0% in FY2017), due to the concurrence of five separate upgrade projects; but, the vehicle mix (large vs small), the large vehicle toll multiplier increase on CTW, and an overall improvement in the Group EBITDA margin (74.9% vis-a-vis 73.9% in FY2017) have still contributed to deliver +10.2% YoY growth in underlying proportional EBITDA, in line with expectations.
2) Thanks to the future traffic growth contribution from current upgrade projects, I expect underlying proportional EBITDA growth to remain in the region of +10% pa for the next two financial years, everything else being the same. In comparison with that, the FY2019 distribution guidance of 59c (+5.4% vs FY2018) looks a bit low, but I guess Management want to avoid having to cut their guidance later in the (undesirable, from my point of view) event of a successful bid for the WestConnex, so they must have opted for a “half-way” distribution increase just in case.
Overall it looks like a “largely-as-expected” result to me.
IMHO & DYOR
TCL Price at posting:
$11.94 Sentiment: Hold Disclosure: Held
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