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3 key takeaways from the Transurban (ASX:TCL) AGM

Transurban shares

The Transurban Group (ASX: TCL) share price has been out of form today.

In afternoon trade the toll road operator’s shares are down over 1% to $13.99.

This follows the release its annual general meeting presentation and quarterly update this morning.

In light of the large amount of information that it released today, I thought I would summarise what I’ve learned into three key takeaways. They are as follows:

Traffic volumes are improving.

During the first quarter of FY 2021, Transurban’s Average Daily Traffic (ADT) decreased by 25.2% compared to the prior corresponding period. Management notes that impacts across each of its markets varied depending on the level of government restrictions in place in response to COVID-19. Positively, during the quarter, Sydney’s ADT increased by 1.5% on the prior corresponding period to 847,000 trips. This appears to demonstrate that volumes will recover quickly once restrictions in other markets ease.

Transurban is well-placed for the future.

In his address, Transurban’s Chief Executive, Scott Charlton, spoke positively about the future and noted that the company is well-placed for growth. Mr Charilton commented: “With $19 billion of critical infrastructure projects across Australia and North America in our pipeline, it is safe to say we still have a busy few years ahead of us.”

He then added: “The five regions we operate in all have large populations, and despite the temporary impacts from COVID-19, they are all expected to continue to grow substantially over the medium and long term. And this growth will require continued infrastructure investment to ensure these cities continue to have efficient and productive transport networks.”

Looking for US equity partners.

Another interesting takeaway from today’s update was that the company is looking to strengthen its capital position by taking on equity partners for its Greater Washington Area assets. It revealed that it has commenced a process for the potential introduction of equity partners and expects a successful agreement to release significant capital into the business. In addition to this, it notes that if it is successful on the Elizabeth River Crossings opportunity, management would look to bring a partner into that asset as well.

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Returns As of 6th October 2020

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of 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.

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