Atlas Arteria (ALX) This morning, the Transurban of Eastern France, Atlas Arteria, released their full year 2022 results. Similar to Transurban, given the regular traffic and revenue updates, there were few surprises, and the result showed the resilience of ALX’s business.

Key Points:

  • Profits: Profit $240 million, up 33% in 2021, as traffic recovered very strongly in the absence of lockdowns, with inflation lifting revenue. All toll roads contributed, with major asset APRR doing the heavy lifting. What was very pleasing was that toll revenue and profits are now ahead of 2019.
  • Dividends:  Second half dividend of 20 cents in line with record first half,
  • Inflation: pricing power was a key theme of the call, ALX’s toll revenues are linked to inflation, but at the asset level, debt is fixed with an average term of 7.5 years. Given the high-margin nature of the businesses, this result showed gross margins increasing in an inflationary environment. On the 1st Feb, the tolls on ALX’s French roads went up +4.6%, the German Tunnel 6.4% and the new Chicago Skyway +11%.
  • Takeover Update:  No news IFM still hold 19% of ALX acquired at $7.10, but were annoyed at last year’s Chicago Skyway acquisition which looks to have temporarily derailed their plans to take over ALX
  • Guidance: Management gave dividend guidance for a minimum of 40 cents per share for 2023, the same as in 2020 (see below). This equates to a 6% yield, but given toll increases and traffic numbers, this should be increased at the half-year 2023 results in August.

Atlas Ateria is held in several of the HNW portfolios and exposes the Portfolio to desirable monopoly assets and enjoys mandated price increases that protect our dividends against the ravages of inflation.  While CV19 hit mobility and toll road revenue, traffic and revenue have rebounded far more quickly than the market expected. ALX is an under-researched stock that offers an attractive valuation, trading on a PE of 9x with a 6% dividend yield.

ALX finished up +2% to $6.74.