Transurban on the right road

Toll road operator seeing positive results from US-based projects.

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Transurban Group (ASX: TCL) has shown investors it is on the right road to the future, after again delivering pleasing results.

A member of the S&P/ASX 50 (Index: ^AFLI), Transurban is a toll road operator and owner. It has 100% ownership of CityLink – located in Melbourne – and Hills M2 and Lane Cove Tunnel – both located in Sydney. It also maintains a majority interest in four other toll roads based in both Sydney and the USA.

Announcing its traffic and revenue data for the March quarter, the group recognised a pleasing 5.6% increase in revenue to $196.4 million compared to the prior corresponding period, with six of the company’s seven roads increasing total toll revenue.

What was particularly pleasing about the company’s report was that, after a rather disappointing start, the amount of traffic on Transurban’s 495 Express Lanes, located in Washington, DC, had risen. Until the end of December, average daily intake for the Lanes was US $18,408, having only opened to vehicles in November. For the March quarter however, daily intake drove forward to US $27,499. Whilst this is certainly good news, the company conceded that it is still “too early to determine any reliable traffic trends” for the road.

The company noted however, that the differences in day mix between this year and the last would need to be considered when reading into the company’s results. It went on to explain that whilst the Easter long-weekend occurred in the March quarter this year, it was included in the June quarter last year.

For instance, where total toll revenue for the group’s largest asset, CityLink – located in Melbourne – increased by a total 7% for the period, it had only gained 3.8% up to and including Holy Thursday.

The company’s share price has grown consistently for the year gone. Having experienced a low of $5.32 in June, shares are currently valued at just over $6.50 – representing 22.2% growth for shareholders. Meanwhile, shares in fellow Australian toll company Macquarie Atlas Roads Group (ASX: MQA), who own toll roads in the USA and Europe, have increased 32.3% since their lows in August.

Construction on a number of Transurban’s roads will continue for some time, including widening work to the M5 South West, which provides access to Sydney Airport (ASX: SYD).

Foolish takeaway

Time remains precious and it seems the roads are becoming more congested. Whilst people begin to accept that they can pay a small toll in order to avoid heavy traffic and get to their destination sooner, companies such as Macquarie Atlas Roads and Transurban could be huge beneficiaries in the future.

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