Aurizon Holdings reported in line with forecasts and FY22 guidance is unchanged. The highlights for Morgans were a deployment of capital into bulk haulage, a rebound in coal metrics, and a dividend cut to fund the One Rail acquisition.
Coal haulage is facing longer term sustainability issues, the broker suggests, but in the meantime strong cash flows can support both the pivot into bulk and shareholder returns. Management is excited about the growth potential in grain haulage.
Target rises to $3.91 from $3.73, Add retained.
Sector: Transportation.
Target price is $3.91.Current Price is $3.55. Difference: $0.36 – (brackets indicate current price is over target). If AZJ meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges – negative figures indicate an expected loss).
