Morningstar | Transurban Is Good Quality But High Gearing and Rapid Expansion Late in the Cycle Increase Risk
Transurban Group is a leading toll road owner/operator, with a portfolio of assets in Australia and North America. Concession lives are fixed, with toll roads handed back to their respective governments debt-free at the end of the concession. The weighted average concession life of the portfolio is around 30 years. Under the leadership of Scott Charlton, Transurban has aggressively expanded its portfolio through a combination of acquisitions and greenfield projects. Toll roads have high barriers to entry and benefit from rising traffic volumes and tolls, which increase in line with the consumer price index or higher. Transurban is a stapled security, with a considerable portion of its net cash flows distributed to security holders pretax. The objective is to increase distributions at a mid-single-digit CAGR in coming years.Transurban Group is engaged in the development, financing, operation and maintenance of toll road networks as well as management of the associated customer and client relationships. Co. manages and develops urban toll road networks in Australia and the U.S. Co. owns concession assets across four key market segments: Victoria, New South Wales, Queensland and the Greater Washington Area.
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