Qube (ASX:QUB) share price lifts on $1.67 billion asset sale update

On top of a major sale, Qube also announced ongoing costs related to upgrades at Moorebank Logistics Park.

| More on:
View of hand holding pen signing new deal with glasses sitting on table next to contract papers

Image source: Getty Images

Shares in Qube Holdings Ltd (ASX: QUB) are slightly higher today following news the company’s set to sell property assets for $1.67 billion. The Qube share price is currently trading at $3.20 – 0.79% higher than Friday’s close.

Today, the import and logistics service provider announced it has entered a commercial term sheet to sell warehouses and property at Moorebank Logistics Park.

However, Qube also said its automation of Moorebank’s IMAX Terminal was likely to be an ongoing weight on the company’s overheads.

Let’s take a look at today’s news from Qube.

Offloading Moorebank assets

Qube announced today it has entered agreements to sell assets at the Sydney logistics park to LOGOS Property Group, part of the LOGOS Consortium.  

The sale will see LOGOS paying $1.36 billion upfront, while another $312 million will be deferred. The payment is subject to numerous conditions.

Qube says the price reflects the park’s strategic value and its future rental value. Not included in the sale, is Qube’s intermodal rail terminals at Moorebank.

The logistics company said the sale would allow it to focus on its core logisitics business. It will use the proceeds to pay off debt, pursue growth opportunities, and explore capital management initiatives.

Qube believes, following the sale, it will benefit from future logistics activity at Moorebank, without needing to fork out for its development.

Subject to the Foreign Investment Review Board’s approval, the sale will be completed in the final quarter of 2021. 

Following the sale, LOGOS is responsible for funding the development of the logistics park. This includes the development of Woolworths Group Ltd‘s (ASX: WOW) warehouse distribution facilities.

Qube advised it would still pay for the automation of Moorebank’s IMEX Terminal and the development of its Interstate Terminal. The company expects to spend between $200 million and $300 million on works at the terminals.

Part of the deferred $312 million will fund the first stage of construction of the Interstate Terminal.

Qube also announced the IMEX Terminal’s automation will be finished years before it is required. This means Qube is unlikely to quickly recover its costs.

So far, Qube has spent around $305 million on the terminal’s automation. It still needs to spend around $80 million to finish the upgrade.

Qube’s upcoming full year results will discuss the long-term cost of the automation.

Commentary from management

Qube managing director Paul Digney commented on the planned sale, saying:

We believe that the transaction with the LOGOS consortium allows Qube to realise a strong value for the [Moorebank] property assets, de-risks delivering the leasing and development of future warehouses and significantly reduces Qube’s ongoing capex requirements.

Further, the transaction positions Qube strongly to focus on growing its core logistics business, while retaining exposure to long-term growth in container volumes at [Moorebank] through terminal and logistics activities.

Qube share price snapshot

The Qube share price is doing well on the ASX – it’s gained 6% year to date.

It is also 15% higher than it was this time last year.

The company has a market capitalisation of around $6 billion, with approximately 1.9 billion shares outstanding.

Should you invest $1,000 in Qube right now?

Before you consider Qube, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Qube wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Industrials Shares