Aurizon looks set to achieve longer-term targets
Ralton Asset Management Limited
Following a pull-back in the share price, we added Aurizon (ASX:AZJ) to the portfolio. AZJ has two key divisions: above-rail and below-rail assets. The above-rail assets are focused on coal haulage for key miners with long-dated take or pay contracts to move thermal and metallurgical coal from mines to port. The below-rail division consists of an extensive rail network, the majority of which is regulated and therein, offers a consistent, predicable return profile to shareholders. Despite the difficulty facing global coal markets and service providers to the industry, we believe AZJ is well placed – from a mix of regulated returns, solid contracts for coal haulage and finally, the relative positioning of QLD and NSW coal mines on global cost curves and their ability to endure. Both divisions offer quite consistent returns and represent strategic assets in terms of infrastructure exposure. AZJ management has done a good job in terms of improving productivity and improving margins post government privatisation and we believe it is capable of achieving its longer-dated margin targets. (VIEW LINK)
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Andrew has been with Ralton since its inception in 2006 and leads the investment management of Ralton’s managed accounts. He brings over 25 years of funds management and investment banking experience having held senior positions with major...
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