It’s been an eventful year for tollroad group Atlas Arteria Group (ASX: ALX), which reported a $15.5 million interim loss as it handed down its half-year results on August 30, after paying out more than $100 million to separate from Macquarie. Atlas Arteria changed its name from Macquarie Atlas Roads in May when it dropped the parent company as managers and the move has cost the group dearly. But can the company build itself back up after its Macquarie split and shine with in-house management? It looks likely. Atlas Arteria’s asset portfolio does look strong, with its 25% stake in…
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It’s been an eventful year for tollroad group Atlas Arteria Group (ASX: ALX), which reported a $15.5 million interim loss as it handed down its half-year results on August 30, after paying out more than $100 million to separate from Macquarie.
Atlas Arteria changed its name from Macquarie Atlas Roads in May when it dropped the parent company as managers and the move has cost the group dearly.
But can the company build itself back up after its Macquarie split and shine with in-house management?
It looks likely.
Atlas Arteria’s asset portfolio does look strong, with its 25% stake in the APRR toll-road in France receiving a boost after a rail strike forced commuters to travel on the roads – upping APRR traffic by 4.6% in the six months to June 2018.
Investors will be keen to keep an eye on asset performance for the second half, and it may be difficult to maintain APRR successes now the public transport crisis has quelled, but APRR also showed continued EBITDA margin improvement of 76% in the first half of FY18 from 75.4% for the previous corresponding period.
A total of 50km of road network has been added on the APRR since 2015, with developments currently underway including road widenings, interchanges, link roads and other user improvements.
As such future growth looks inevitable.
Atlas has also made moves to acquire the remaining 30% of Germany’s Warnow Tunnel to give it 100% ownership of the asset and earnings on its stake in the A41 in Eastern France rose over the reporting period.
The half-year results revealed a 3.4% increase in Atlas’s aggregate portfolio traffic and a 5.6% lift in proportionate revenue to $559.9 million.
EBITDA rose 6.2% to $429.1 million.
And while the separation from Macquarie ate into profits this time, the company should benefit from its Macquarie split going forward, with running costs estimated to be between $15 million and $20 million a year with internalised management – much less than they were forking out for Macquarie.
UBS slapped a buy rating on Atlas back in April when internalisation plans were announced and Credit Suisse has forecast good growth for the stock over the medium term, but many investors interested in the sector have their eyes on Transurban Group (ASX: TCL) right now.
Transurban is currently in a trading halt ahead of its $4.8 billion capital raising to fund the acquisition of a 51% stake in Sydney’s WestConnex tollway.
Transurban’s capital raising is certainly substantial and the company would be granted a 42.5 year concession over WestConnex if all goes well – a road projected to save 40 minutes of travel time between Sydney Airport and Paramatta by 2031 with 40% of Sydney’s population said to live within 5km of the network.
Transurban’s annual report is due to be handed down on September 7.
Another large cap cousin to keep an eye on at the moment is Sydney Airport (ASX: SYD) after its recent report showed passenger numbers were climbing as more flights and locations are added to its offering.
Sydney Airport posted a 7.9% rise in half-year revenue to $770.8 million with interim earnings before tax, depreciation and amortisation coming in at $623.4 million – up 8%.
It's been a nail-biter of a reporting season here in the first half of 2018.
But the real action, in my opinion, is what companies are doing with dividends.
What does this mean for you? Well there is one stock I've found that could very well turn out to be THE best buy of 2018. And while there's no such thing as a 'sure thing' when it comes to investing - this ripper might come as close as I've ever seen.
Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Sydney Airport Holdings Limited and Transurban Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.