Company Reports

Qube's strategy is to consolidate the fragmented logistics chain surrounding the export and import of containers, bulk products, automobiles, and general cargo, to create a more efficient and cost-effective supply chain. The business has enjoyed some successes to date, though significant scope for industry consolidation remains.

Narrow-moat-rated Qube Holdings reported a strong fiscal 2024 result despite economic headwinds, given the diversified nature of its business. Underlying EBITA increased 14% to AUD 318 million and underlying net profit after tax, or NPAT, increased 15% to AUD 258 million, in line with our expectations. The dividend increased 13% to AUD 9.1 cents per share, fully franked and based on a payout ratio of 63% of earnings per share.

Qube's strategy is to consolidate the fragmented logistics chain surrounding the export and import of containers, bulk products, automobiles, and general cargo, to create a more efficient and cost-effective supply chain. The business has enjoyed some successes to date, though significant scope for industry consolidation remains.

Narrow-moat-rated Qube upgraded guidance for fiscal 2024 adjusted net profit after tax growth to 10%-15%, from 5%-10%. This is a solid performance in the face of significant headwinds to consumer spending, with management citing healthy activity levels across most of Qube’s businesses.

Qube's strategy is to consolidate the fragmented logistics chain surrounding the export and import of containers, bulk products, automobiles, and general cargo, to create a more efficient and cost-effective supply chain. The business has enjoyed some successes to date, though significant scope for industry consolidation remains.

Qube's strategy is to consolidate the fragmented logistics chain surrounding the export and import of containers, bulk products, automobiles, and general cargo, to create a more efficient and cost-effective supply chain. The business has enjoyed some successes to date, though significant scope for industry consolidation remains.

Narrow-moat-rated Qube Holdings reported a solid first-half fiscal 2024 result. Underlying EBITDA rose 11% to AUD 157 million on the previous corresponding period, tracking in line with our full-year forecast. Underlying net profit after tax increased 8% to AUD 135 million, versus our flat forecast with interest expense and contributions from associates better than expected. An interim dividend of AUD 4 cents per share is up 7% on the PCP.

Qube said first-quarter financial performance was solid and consistent with guidance for underlying earnings growth in fiscal 2024, albeit below the strong growth rate achieved in fiscal 2023. We remain cautious about the near-term outlook for consumer spending in the face of tighter monetary policy, but with a solid first quarter in the bag, we slightly lift our full-year earnings forecasts. Our longer-term forecasts are largely unchanged—we forecast a five-year EBITDA CAGR of 5.5% compared with 5.4% previously.

Qube's strategy is to consolidate the fragmented logistics chain surrounding the export and import of containers, bulk products, automobiles, and general cargo, to create a more efficient and cost-effective supply chain. The business has enjoyed some successes to date, though significant scope for industry consolidation remains.

Narrow-moat Qube presented a positive first-half result considering the current headwinds facing the industry caused by the coronavirus and trade tensions with China. Underlying revenue of AUD 953 million was 2% below the same period last year. However, underlying net profit improved 9% to AUD 74 million as profit margins benefitted from price increases and productivity improvements in the Patrick stevedoring joint venture. Improved conditions in the operating division and lower net interest expense also contributed. Qube’s EBITDA margin firmed to 17.1% in the first half from 16.3% a year prior.

Qube's strategy is to consolidate the fragmented logistics chain surrounding the export and import of containers, bulk products, automobiles, and general cargo, to create a more efficient and cost-effective supply chain. The business has enjoyed some successes to date, though significant scope for industry consolidation remains.

Qube's strategy is to consolidate the fragmented logistics chain surrounding the export and import of containers, bulk products, automobiles, and general cargo, to create a more efficient and cost-effective supply chain. The business has enjoyed some successes to date, though significant scope for industry consolidation remains.

Narrow-moat Qube Holdings remains overvalued, currently trading at a 23% premium to our new fair value estimate of AUD 2.85, which we raised 5% after factoring in the likely sale of the Moorebank warehouses for an attractive price. Qube’s narrow economic moat is attributed to its cost advantage, which is underpinned by its scale and unique vertically integrated logistics model.

Qube Holdings issued a trading update in which it downgraded earnings guidance for the ports and bulk division, stating underlying earnings for fiscal 2016 will be lower than fiscal 2015. This is largely driven by the completion of several contracts during fiscal 2015, including the Yara contract at Dampier and project work at Roy Hill. Qube expects these factors to be partly offset by the new contracts secured in fiscal 2015, and the full-year contribution of acquisitions and growth capital expenditure. We have reduced our 2016 and 2017 earnings estimates by 6% and 4% respectively, however, our fair value estimate remains broadly unchanged at AUD 2.80 per share. The current share price is trading at a slight discount to fair value, reflecting investor uncertainty about the depth and duration of the slowdown in logistics and bulk handling. Potential positive catalysts may include value-adding acquisitions, an improvement in domestic economic conditions, or a renewed focus on the attractive economics of Moorebank. We maintain our narrow economic moat and medium fair value uncertainty ratings. Qube has established an integrated ports and logistics services business with national scale.