I thought it would be good to revisit a stock that we have talked about and has had its latest financials updated within Stockopedia.
Aurizon Holdings (ASX:AZJ) operates one of the largest rail networks in Australia and transports a comprehensive range of commodities, including mining, agricultural, industrial, and retail products for a diverse range of customers across Australia. As mentioned, this has been covered at depth in a previous commentary of the business. For those that need to familiarise themselves further with AZJ you can refer to my previous article written on 23rd August 2023 .
AZJ over recent years has increased debt levels and acquired One Rail in FY22, invested heavily in new wagons, upgraded terminal & port services infrastructure, and purchased new locomotives in and attempt to diversify revenue, earnings, and profits away from the regulated returns of their Central Queensland Coal Network (CQCN) asset. As in, FY23 CQCN generated circa 30% of AZJ’s revenue & earnings and nearly 70% of profits and a quick look at their FY24 segment breakdown it doesn’t look like much has changed.
Source: AZJ FY24 Annual Report
Other points of interest are, AZJ’s financial performance over the past 6-years had been lacklustre with revenues returning to FY15 levels, otherwise remaining flat. Profitability and cash flow measures have been in decline. Interest coverage has fallen from 6.8 in FY22 to 3.09 in FY23 on the back of increased debt levels and declining cash in the bank. However, since 2016 AZJ has returned $5bn to shareholders via dividends and share buy-backs and generated free and operational cash flows during this period. So given AZJ reported early this month, let’s see how they are going with their goal of diversifying away from their CQCN by increasing exposure to bulk and containerised freight.
StockRank:
First stop, the StockRank and individual factors. On the back of a much-improved financial performance in FY24, which saw net profit increase from $276m in FY23 to $406m in FY24. This on the back of AZJ increasing revenue and operating profit from $3.5bn to $3.8bn and $713m to $913m respectively. The improved FY24 performance has resulted in AZJ’s Quality factor increasing from 66 to 83. Their…
