LOGISTICS giant Qube has been given a ‘neutral’ rating by analysts UBS following the company’s recent annual meeting.

The company recent announced its annual figures, the highlights being:

  • An increase of more than 15% in underlying Net Profit after Tax to more than $123m after amortisation.
  • Underlying revenue growth of 4.7% to $1.73bn
  • And a statutory NPAT attributable to Qube of more than $196m.

UBS noted Patrick’s competitor DPWA had again raised landside port charges, increasing the average fee paid by trucking companies from $66 to $88 per full container collection.

“As quayside revenue falls and stevedore costs rise, these charges diversify the source of revenue further towards landside logistics operators,” UBS stated.

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“The ACCC recently disclosed that infrastructure charges represented 12% of stevedore revenue in FY19… Following changes to our forecasts we see these charges accounting for 21% of Patrick’s FY21 revenue.”

UBS noted the ACCC stated it did “not have the power to determine stevedores’ charges”, and therefore there was a wait to determine the Victorian government’s review of Port Pricing.

UBS stated that Qube Holdings faced risks, including:

  • Cyclical risk exists in the company’s containerised logistics and auto import businesses due to reliance on the Australian economy;
  • Key person risk given the reliance on a “handful of senior management” to drive strategy;
  • No certainty that the Moorebank rail terminal project will be able to take market share from competing intermodal terminals and that the shift from road to rail will play out in the way that our estimates suggest;
  • Capital intensity could increase as Qube focuses on growth opportunities, and
  • There is a risk of industrial action as a number of operational employees are members of trade unions which are covered by collective agreements.

During the annual meeting, Qube chair Allan Davies said they expected “broadly similar” overall economic and competitive conditions to FY19 with subdued trends in container, grain, vehicle and general cargo volumes.

“Qube will seek to continue to mitigate these pressures through its scale, diversification, further cost reductions where possible, and ongoing benefits of its investments,” Mr Davies said.

“In FY20, although there is some downside risk, Qube expects to report another solid increase in underlying NPAT (pre-amortisation) and continued improvement in underlying earnings per share (pre-amortisation). This assumes that there is no material change to domestic or global economic conditions for the remainder of FY20.” Mr Davies said they would continue to attract significant long term investors interested in companies with strategic fixed assets and a history of growth.

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