Morgans is more confident in the outlook for the regulated network after the briefing. However, concerns continue regarding competitive pressures above rail. With the revenue allowance for operating costs fixed until FY27 for the UT5 agreement, management was upbeat about the cost-cutting potential.
The company currently pays all earnings out as dividends and assuming this is maintained, Morgans expects the distribution to reduce in FY19 to $0.22 per security before averaging $0.28 per security across FY20-22.
The broker maintains a Hold rating and raises the target to $4.73 from $4.59.
Sector: Transportation.
Target price is $4.73.Current Price is $5.34. Difference: ($0.61) – (brackets indicate current price is over target). If AZJ meets the Morgans target it will return approximately -13% (excluding dividends, fees and charges – negative figures indicate an expected loss).
