# TCL - Transurban Group



## slimtrader (10 January 2006)

TCL looks like its ready to break out of established channel. A close above 700 should clear all near term resistance and a target of 760 could be within reach.


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## Lucstar (19 May 2006)

Hey guys, 
Was wondering if anyone else is watching TCL. It appears to me that there is a good technical outbreak alert. I also heard that they got some good deal from the government in the budget. Anyone have any comments to add, i would love to hear it 

P.S: Sorry i cant post any charts atm, if someone could post a chart, would be great


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## Dutchy3 (17 July 2006)

OK so it's not the end of the week. 

This one looks particularly strong given the overall market weakness.

I'll check again on the CLOSE this Friday


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## CanOz (17 July 2006)

Without sounding too naive, what do you consider the GOLD capital of Australia?


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## Dutchy3 (17 July 2006)

Hi CanOz - Kalgoorlie


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## Dutchy3 (23 July 2006)

TCL did not quite close strong enough on Friday for me to take a position. The little bit of hestitation witnessed was enough to wait for further confirmation, or otherwise this week


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## Dutchy3 (16 September 2006)

This stock could be setting up nicely ... volumes falling away as the churning of the last 2 years takes its toll on the participants.

Looking for that BIG WHITE into new air with a relative rise in volume to signal a resumption of an uptrend. Could it be in the new 4 - 8 weeks?


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## Dutchy3 (8 October 2006)

I've been away for a bit so monitoring positions rather than looking to enter

This one signalled a buy two weeks ago with a relative increase in volume


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## Dutchy3 (20 October 2006)

Thought I'd get a bit cute with this one. Missed what I considered the initial signal move north a few weeks ago and the volume for the move was not encouraging. Had another look at the close today and figure the stock does want to move higher. 10 - 20% might accrue in the next 12 months, and playing it with plenty of margin ...


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## bigdog (13 December 2006)

Trading Halt ANN to ASX pending ANN by TCL has just been posted

http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00677597

I hold TCL

SP and volume has been on the rise and SP is now 52 week high

Date	----------Open	High	Low	Close	 Volume 
12-Dec-06	 7.69 	 7.72 	 7.65 	 7.69 	 2,652,336 
11-Dec-06	 7.56 	 7.66 	 7.56 	 7.63 	 1,752,443 
08-Dec-06	 7.50 	 7.58 	 7.46 	 7.54 	 2,948,784 
07-Dec-06	 7.37 	 7.49 	 7.36 	 7.46 	 2,010,513 
06-Dec-06	 7.40 	 7.41 	 7.34 	 7.39 	 2,144,562 
05-Dec-06	 7.36 	 7.36 	 7.30 	 7.33 	 2,070,115 
04-Dec-06	 7.35 	 7.40 	 7.33 	 7.33 	 1,827,647 
01-Dec-06	 7.32 	 7.40 	 7.30 	 7.36 	 1,632,688 
30-Nov-06	 7.30 	 7.34 	 7.28 	 7.32 	 3,922,517 
29-Nov-06	 7.22 	 7.33 	 7.20 	 7.30 	 3,906,745 
28-Nov-06	 7.19 	 7.25 	 7.19 	 7.20 	 1,403,079 
27-Nov-06	 7.28 	 7.29 	 7.25 	 7.26 	 819,351 
24-Nov-06	 7.26 	 7.29 	 7.22 	 7.28 	 624,321 
23-Nov-06	 7.16 	 7.28 	 7.16 	 7.26 	 2,553,578 
22-Nov-06	 7.30 	 7.30 	 7.21 	 7.24 	 2,125,211 
21-Nov-06	 7.18 	 7.25 	 7.17 	 7.24 	 779,389 
20-Nov-06	 7.24 	 7.29 	 7.18 	 7.18 	 3,113,310 
17-Nov-06	 7.22 	 7.27 	 7.18 	 7.25 	 2,458,962 
16-Nov-06	 7.22 	 7.23 	 7.20 	 7.20 	 2,284,481 
15-Nov-06	 7.23 	 7.24 	 7.18 	 7.21 	 2,481,105 
14-Nov-06	 7.24 	 7.25 	 7.18 	 7.22 	 1,698,925 
13-Nov-06	 7.20 	 7.24 	 7.19 	 7.22 	 1,637,367


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## sam76 (13 December 2006)

Yep, she's been a slow but steady climb for TCL over the last month.

I'm also a long term holder.

perhaps the ann. has something to do with expansion into the states.


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## bigdog (13 December 2006)

Further ASX ANN today in response to SP increase

Strange response seeing a trading halt announced at 9:05 today

TCL 10:28 AM  Response to ASX Query re: Share Price 

http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00677685


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## sam76 (13 December 2006)

well, the rumours are a takeover of Sydney roads (SRG) by Transurban (TCL)


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## sam76 (13 December 2006)

oops, maybe the other way around...

http://www.theage.com.au/news/Busin...f-takeover-talk/2006/12/13/1165685725479.html


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## Dutchy3 (13 December 2006)

This will move to a new all time high in the next weeks ... the news will be positive once the hault is lifted ... this is a classic pattern which offers better than average odds for improvement in price.


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## sam76 (13 December 2006)

this might be a good one for all you day traders tomorrow.

+ announcement expected

both parties say ann will ne before market opens tomorrow

a quick in a and out for a few grand for you all.

I would if i could..


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## reece55 (14 December 2006)

Hrmmm..... this is a very interesting little affair....

Only six months after the MIG in-specie and SRG will be taken out by TCL.

The article states that somewhere round the mark of $1.30 would be accepted, but I would have thought they might want a little more than a 13% post the transfer. However, I am not sure that there will be much of a premium placed on TCL stock - looks already factored in. Plus, any premium will probably be taken out in the open. Keep watching here me thinks..........


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## bigdog (14 December 2006)

ASX ANN this morning

TCL 9:14 AM   Transurban & Sydney Roads Group announce Merger 

Transurban Group (”Transurban”) today announced it intends to make an offer (“Offer”) for all the stapled securities in Sydney Roads Group (“SRG”). Under the Offer, Transurban is providing SRG security holders two consideration alternatives:
• 1 Transurban security for every 5.7 SRG securities (All Scrip Alternative);
OR
• $1.32 cash per SRG security up to a maximum amount of cash consideration of $500 million (Cash Pool Alternative). The relative mix of cash and securities under this alternative will vary according to the number of SRG security holders who accept it. If less than 40.6% of SRG security holders elect the Cash Pool Alternative, those that accept it will receive all cash consideration for their securities.

The All Scrip Alternative implies an Offer price of $1.35 per SRG security (based on Transurban’s closing security price on 12 December 2006 of $7.69). The Cash Pool Alternative implies an Offer price of $1.32 per SRG security.

The All Scrip Alternative values SRG equity at $1.26 billion and represents a premium of 24.9% to the SRG Volume Weighted Average Price (“VWAP”) from listing on 31 July 2006 to 12 December 2006 of $1.08.

As part of this transaction Transurban is providing distribution guidance of 57 cents per security for FY08. As previously announced, guidance for FY07 is 54 cents per Transurban security.

SRG Chief Executive Officer Mr Ed Sandrejko said today, “From day one, SRG’s strategic purpose and operational focus was on generating value for the holders of SRG stapled securities. This offer from Transurban delivers on that focus and represents a good offer for SRG security holders.

“The directors of SRG recommend that SRG security holders accept the Offer by Transurban in the absence of a superior proposal, and intend to accept the offer by Transurban in respect of any SRG securities held by them or on their behalf in the absence of a superior proposal,” Mr Sandrejko said.
Transurban Managing Director Mr Kim Edwards said the merging of the two toll road groups has a strong strategic rationale for both SRG and Transurban security holders.

“Transurban’s Offer provides full value to SRG investors as well as providing them with two different methods of acceptance,” Mr Edwards said.

http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00678092


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## bigdog (14 December 2006)

Further ASX ANN

TCL 9:24 AM   Merger of Sydney Roads & Transurban Presentation 

http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00678104


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## Dutchy3 (14 December 2006)

When will the halt be lifted ... I wonder?


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## bigdog (14 December 2006)

Does anyone know when trading for TCL will commence?

Company Trading Status: Adjust


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## Dutchy3 (14 December 2006)

Hi BD ... great minds ... I'm long with CFD's and don't like paying interest on a stalled stock ....


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## Nicks (30 July 2007)

Not much talk on this stock for a while. I have just got in as I took a look at the returns and they were great, plus it has a* secure cashflow in a volatile market. *
Anyone else got some fundamental views on this stock?


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## Nicks (21 August 2007)

Ok so am I the only one thats caught on that at this price the stock is returning a stable yield of 10% on dividend alone?

I mean seriously, its a cash cow. It has a reliable source of steady income - unless the people of Melbourne and Sydney stop driving cars overnight.

Check it out people. Its been trading up to $8 recently based on its yield and represents a bargain at this price (imo). It would be good just for the capital gain upside but the yield is great too.

I would think it would retrace quickly toward $8 again - any techo's wanna post an analysis for verification would be great.


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## MAPfan (22 August 2007)

Not sure about your views in mbl as map at least looks good

However think you are on the money here, great stock cheap great yield, one of my fave strategies to buy these types of stocks, as I have it, Im looking for more


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## Gullible (30 January 2008)

*TCL - Transurban*

I couldn't find a thread on TCL, so thought I would start one after buying some TCL yesterday ...  

Present attractive dividend yield at 8.15%, and TCL's continuing strong performance looks solidly based through their toll roads, esp Melbourne's CityLink, see annual reports: http://tinyurl.com/34vulz 

Rather than having money sitting in a fixed term deposit at 7.25%, I thought it would do a lot better in TCL for the next few years with little risk. 

Comments ? 

- Gullible


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## Viginti (30 January 2008)

*Re: TCL - Transurban*

IMO TCL should continue solid earnings and subsequently dividend - solid infrastructure that will continue to generate cashflow (people don't stop driving, no matter what the economy is doing!!  Though, do they avoid tolls?!?!?)

Biggest challenge is finding some short term growth opp's...HOT lane project is a great long term play, but how do they generate growth in the short to medium term??

Think this one will sit in my portfolio for some time to come....


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## Julia (30 January 2008)

*Re: TCL - Transurban*

Gullible, I bought this about four years ago pretty much on the basis you have suggested but eventually sold it about two years later because - although yes it does have an attractive yield, the SP just wasn't going anywhere.  It still isn't!
I guess on the basis of the yield it has a place in a balanced p/f.  Unlikely to make you rich, however!


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## josjes (31 January 2008)

*Re: TCL - Transurban*

I bought it because it is perceived as a defensive play. Thinking the market is too obsessed about growth, so when market comes down, defensive stock will at least stay afloat. Yep gullible, when in bear market everything goes down, regardless it's growth or "defensive" stock. Bought it Sept 07 for a defensive play, I sold it again this month just before the crash for a loss.


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## dalek (31 January 2008)

*Re: TCL - Transurban*

Bought TCL on the way down (a bit too early as it turned out) but they do have an attractive earning rate and give my SMSF pie chart a bit of balance.
Their Share price hasn't been to bad,  broadly around $4.50 2004, $6.50 2005
$7.25 2006 and $8.25 in 2007 before starting to get a bit pear shaped along with many others. 
They signed a pretty attractive sweetheart deal with Brack's mob that will gurantee nice income streams until, I think, 2032, but I would agree it is difficult to see exciting growth opportunities for them in the immediate term.


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## charcoal (31 January 2008)

*Re: TCL - Transurban*

I bought this several years ago for similar reasons....and yes the dividends have been good. I am a little surprised by the fall in SP in the latest round of selling...I am guessing it is because it is fairly leveraged and will have to refinance part of its borrowings now and then in the future.
Another one I am surprised by is BBI...I am guessing the same reasons but more there is something I don't know about..now a very attractive yeild on that one...


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## Nicks (4 February 2008)

*Re: TCL - Transurban*

I hold TCL and believe a stock like this is essential stabiliser in your portfolio. For the reasons already mentioned, it is a solid cash earner - people will always drive. It shouldn't be too affected by the credit markets as they easily get finance due to the fact that they have very low risk steady income. 
Excellent stock to be in at the moment and at this price its very attractive and brings a very nice yield alone (plus scope for capital growth up to and above $8 not only because it has in the past but for these same very fundamental reasons).
BBI is another that I categoirise in this basket with more or less the same explanation at the moment..... though slightly more complex it is returning a very nice yield.
Plus, both have potential for 30-40% even 50% capital gains potential to previous prices if the market goes up.
These 2 for a balanced, steady and yield earning portfolio are a good position to hold imo.


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## Gullible (4 February 2008)

*Re: TCL - Transurban*



Julia said:


> I guess on the basis of the yield it has a place in a balanced p/f.  Unlikely to make you rich, however!




You're probably right.  But with the present bearish uncertainties, at the moment I'm looking for less sexy stocks that are unlikely to make me poor. 

- Gullible


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## Julia (4 February 2008)

*Re: TCL - Transurban*



Gullible said:


> You're probably right.  But with the present bearish uncertainties, at the moment I'm looking for less sexy stocks that are unlikely to make me poor.
> 
> - Gullible



Sure.  Makes sense at the moment.  It doesn't seem to have been as badly affected as some in the recent volatility.


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## Bill M (9 March 2008)

TCL has been taking a battering of late, closed at $5.60 on Friday. Looking at a 10% unfranked yield here, any comments?

News Story From a Couple of Weeks Ago Here.


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## Muschu (9 March 2008)

Bill M said:


> TCL has been taking a battering of late, closed at $5.60 on Friday. Looking at a 10% unfranked yield here, any comments?
> 
> News Story From a Couple of Weeks Ago Here.




Hi
I had TCL from 2005 until mid-2007 and, in that climate, found it disappointing.  However at current prices and in the "new" climate it could be worth re-visiting, particularly for dividends, as a long term hold.  I can't see why there shouldn't be a capital rise, over time, as well.  They seem to be pretty much a "cash cow" in terms of revenue.
The etrade site doesn't give a P/E ratio for TCL -- anyone know why?
Regards
Rick
PS - I am a novice trader with a long-term view.


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## urgalzmine (9 March 2008)

Muschu said:


> Hi
> I had TCL from 2005 until mid-2007 and, in that climate, found it disappointing.  However at current prices and in the "new" climate it could be worth re-visiting, particularly for dividends, as a long term hold.  I can't see why there shouldn't be a capital rise, over time, as well.  They seem to be pretty much a "cash cow" in terms of revenue.
> The etrade site doesn't give a P/E ratio for TCL -- anyone know why?
> Regards
> ...




Well I thought that a PE ratio can only be applied if you actually made a profit. Looking at the financials, they dont make a profit, therefore dont have a PE.
(correct me if i am wrong)

They also have a huge debt problem, with high interests rate they are getting hit. This may actually mean they will reduce their dividends for this year. Dividends look to be june and dec 

In other words I think the market is saying stay clear, from 28/02/08 sp was close to $6.70 and now about $5.60, 15% of the share down in about 7days.

Maybe a buying opportunity? I dunno


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## Muschu (9 March 2008)

urgalzmine said:


> They also have a huge debt problem, with high interests rate they are getting hit. This may actually mean they will reduce their dividends for this year. Dividends look to be june and dec
> 
> Thanks for that.  I just checked the etrade site and the debt you mention is [imo] probably quite an issue in the present time.


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## Muschu (9 March 2008)

Just thinking on a tad... I recalled an article in the FR Smart Investor and pulled it out.  [Note that this was 10/07 before a lot of the proverbial hit the fan].  
TCL was referred to [in fact the first reference] in an article concerning "stocks to navigate a volatile market".
Partial quote:

"A growing taste for debt in the sector [infrastructure] means it's no longer an automatic safe haven.  TCL is a stand-out exception....The broker [Deutsche] says Transurban's seven tollways would have to suffer an unlikely 30 per cent reduction in traffic volume over a sustained period before the company would have to default on any debt..."

Back then, in October, the share price was around $7. Now it's $5.60 or so.

The dividend yield has gone from about 8% to about 10%. [If dividend levels are sustained].

Can't be completely bad surely?


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## urgalzmine (10 March 2008)

Hey Nick 

They wont go bankrupt and they wont have problems paying their debt. They will have a problem with reduced profits due to funding interest debt.

The market is correcting this share and in doing so has factored in reduced profit.

I think if you thought long term about this share you would come out infront.

I mean TCL has got a monopoly on the roads, they are allowed to increase the tolls and the goverment arent allowed to compete against it by building other roads. We can thank Mr. Kennet for that marvelous deal.

If they dont play with the dividends the sp closer to the dividend date looks chunky. For growth I dont think TCL have any new projects. They just need more cars and increase tolls.

I think thats why the sp isnt going anywhere fast.. besides maybe down in the short term..


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## Bill M (10 March 2008)

To understand why their losses are high, it is best to read this news story:

"A major contributor to the net loss for the period is depreciation and amortisation. It is normal for companies with significant investment in infrastructure assets to incur a disproportionally high depreciation charge in the early years of operation. In the case of toll roads an amortisation charge is generally recognised over the estimated term of the right granted to operate the road rather than the useful life of the asset. This has the effect of realising a higher charge than would otherwise be recognised on a useful life calculation. 

*Depreciation does not affect the underlying operational contribution of the business which is extremely healthy.*Transurban’s reported net loss after tax for FY07 was $151.2 million, compared to $60.9 million for the prior corresponding period." 

Source, click on pdf file dated 22 august 2007.


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## urgalzmine (10 March 2008)

Hey Bill

Thanks for that, but why would the market crucify this share?

Well we know in the long term as long as the tunnel/roads dont collapse this is sure bet


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## michael_selway (20 June 2008)

urgalzmine said:


> Hey Bill
> 
> Thanks for that, but why would the market crucify this share?
> 
> Well we know in the long term as long as the tunnel/roads dont collapse this is sure bet




Hm using debt to fund fund dividends...

*Earnings and Dividends Forecast (cents per share) 
2007 2008 2009 2010 
EPS -17.2 -1.0 -2.1 -2.0 
DPS 54.0 57.0 58.0 60.0 *

thx

MS




> TOLL road operator Transurban has become the first of an expected long line-up of major infrastructure companies to go to the sharemarket for a handout, after it yesterday announced plans to raise around $1 billion in capital in an effort to reduce the level of debt on its balance sheet.
> 
> In a stark reversal to Transurban's deliberate strategy of gearing-up its balance sheet under former chief executive Kim Edwards in late 2006, the group's new CEO Chris Lynch said the model of using debt to fund distributions was "not sustainable in this market".




http://business.smh.com.au/toll-road-operator-shifts-into-reverse-20080619-2tkv.html


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## Kieran (29 September 2008)

> But in a rude shock to Transurban unit holders reliant on the distributions paid by the company, it said distributions would fall to 22c next financial year.



- News Article linked in post above

That puts it at 4% Dividend Yield at the current share price of $5.50 which isn't brilliant at all. When you consider Julia's comment about the share price going anywhere I'm reconsidering my idea of buying in!


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## Wysiwyg (15 November 2009)

Takeover proposal from 2 Canadian pension investment fund managers has popped Transurban (TCL) up from its 2007 downtrend. Average volume from September rose but could have been for any reason.



> 5 November 2009
> 
> Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan Confirm Indicative Proposal to Acquire Transurban
> 
> ...


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## Smurf1976 (7 August 2012)

Dividend on TCL last year was 29.5 cents. Based on current share price of $5.94 that's a yield of 4.97%

A search using Etrade brings it up correctly based on dividend yield, but "Dividend Yield After Tax" shows a yield of 30% which is quite a difference.

Is this a calculation error? Or is there something unusual about taxation of dividends from this company? Or something I've misunderstood?


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## piggybank (22 October 2013)

Closed today at $7.21, it's highest since 2007.


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## coolcup (8 August 2014)

In my view, one of the best "sleep at night" investments on the ASX. Strong result and excellent business model. Long term growth appears sound underpinned by traffic growth (driven by population growth) of 2-3% pa plus CPI-type toll increases of 2-3% pa plus leverage gets you comfortably to 8-10% pa distribution growth in a steady state. Operational improvements at roads such as LCT and Cross City Tunnel are additive to this with the potential for accretive acquisitions down the track. Really like this stock and am very long, while bond yields remain depressed.


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## skc (8 August 2014)

coolcup said:


> In my view, one of the best "sleep at night" investments on the ASX. Strong result and excellent business model. Long term growth appears sound underpinned by traffic growth (driven by population growth) of 2-3% pa plus CPI-type toll increases of 2-3% pa plus leverage gets you comfortably to 8-10% pa distribution growth in a steady state. Operational improvements at roads such as LCT and Cross City Tunnel are additive to this with the potential for accretive acquisitions down the track. Really like this stock and am very long, while bond yields remain depressed.




I can never understand this stock. It doesn't own the toll roads, it owns toll road concessions which are of limited lives. Some of these concessions must be returned to the government free of debt. How do they pay the debt when they payout most of the free cash flow as dividend? Does the NPV style analysis actually stack up?


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## coolcup (9 August 2014)

skc said:


> I can never understand this stock. It doesn't own the toll roads, it owns toll road concessions which are of limited lives. Some of these concessions must be returned to the government free of debt. How do they pay the debt when they payout most of the free cash flow as dividend? Does the NPV style analysis actually stack up?




The point you raise is certainly valid. In the early phases of concession life banks don't need much of the debt paid off as the terminal value is so far away in the net present value of the asset. Typically, as TCL's roads have progressed through their lives, they have also become more congested requiring further expansion and extensions to the existing concession as a result. These extensions are highly NPV accretive as the cost of widening the road to add capacity is typically paid back by higher traffic flow over the original concession life. For assets which do reach the end of their concessions, I expect TCL will set aside cash for debt amortisation but I doubt this will happen in most of the Sydney assets at least - traffic here is horrendous!


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## Wysiwyg (11 August 2015)

Transurban looking forward to a profitable year ahead. Nice chart. More sellers please.


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## skc (2 November 2015)

skc said:


> I can never understand this stock. It doesn't own the toll roads, it owns toll road concessions which are of limited lives. Some of these concessions must be returned to the government free of debt. How do they pay the debt when they payout most of the free cash flow as dividend? Does the NPV style analysis actually stack up?




Interesting article about the chase for yield on SYD, TCL and MQA.

http://harnessam.com.au/wp-content/uploads/2015/10/On-yield-stocks-Oct-2015.pdf

I have the same question... and that was back in Aug 2014, when the share price was <$8. I didn't put on a strategic short or anything, as some of the takeover price on toll roads are bothering on ridiculous. But it still illustrate 2 important.

1. You may be "right" but the price can be "wrong" for a long time.
2. If this was ever to reverse... it could go back down a long way.

This is one of those trades that you can't make a false start... you need to wait for the tide to turn. And that's assuming you are correct!


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## Ves (3 November 2015)

Thanks skc,  that is a great read and your additional comments are also very relevant.


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## skc (18 November 2015)

skc said:


> I have the same question... and that was back in Aug 2014, when the share price was <$8. I didn't put on a strategic short or anything, as *some of the takeover price on toll roads are bothering on ridiculous.*




MQA sold some assets at a very high price again.



> *Another day, another eye-popping tollroad multiple*
> 
> Anyone who thought Australia's IFM Investors was "nuts" for paying 32-times earnings for an American tollroad in March should check out the sale result at the interconnecting Chicago Skyway.
> 
> ...




I know we are in a ZIRP forever scenario... but 35x EBITDA?! How can it possibly stack up? The concession on Skyway (according to the article) is 88 years.

TCL itself trades at around ~24x EV/EBITDA. And according to my quick sum... it has a weighted (by revenue) average concession life of ~28.5 years. So I did a few quick spreadsheets just to get my head around the numbers:

1. Simply look at the most simple business... making FCF of $100 per year for 30 years, with 2% annual growth, and you want a return of 8%. The NPV is simply $1475... or <15x FCF. To value it at 24x, you need to increase annual growth to 3% and lower the required return to 5%.

But TCL's FCF is nothing like EBITDA... it pays a lot of interest and it pays tax (not to mention maintenance capex, but let's assume that is zero for the moment). It is also geared up to the tune of ~8.5x EBITDA. So I did another back-of-envelop calculation of a business with the following numbers...

2. EBITDA per year = $100, growing @ 2%, 30 year life. Debt = $850 @ 3.5% interest. DA per year = $50 (assumed constant), Tax rate 28%. Using a required return of 8%, I calculated NPV = $972, or ~<10x EBITDA. Note that debt is $850 so equity value is only $172.

If I increase growth to 3% and reduce required return to 5%, NPV = $1540 or ~15x EBITDA.

To get to anywhere like 24x, I'd need to assume growth @ 4.5% and return of 3.5%... to get NPV = $2,350.

TCL's operating cashflow doesn't even cover the distributions, so it's not repaying any debt. But at the end of the concession, the toll road is supposed to return to the government debt free? So the question is... what am I missing? Have a made a gross error somewhere?

Do pension funds buying these toll roads value it using different tax rate? Or much lower interest costs? Or may be not all concessions need to be returned debt free?

FWIW, something like DUET group, which is similar infrasturcture asset but with a perpetual life (i.e. no end of concession and no need to repay debt) trades at ~11x EBITDA. Why would someone want to buy TCL @ 2.5x DUE's multiple when it only has a 30 year weighted lifespan?


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## Ves (18 November 2015)

Hi skc

I've often wondered the same thing.   I think one of the advantages that a lot of good infrastructure assets have, due to consistent,  predictable (compared to other assets at least) cash flows, is a lower cost of capital.   

I had a quick look at Macquarie's broker report for TCL  (FWIW,  I wouldn't trust their predictions,  but it's a good starting point for what the market may be thinking).

They're saying FCF,  EBITDA and other profitability measures are going to grow at between 10-15% per annum up to 2021.  They don't provide any forecasts after that period.   But they are claiming that there are lots of growth capex initiatives either in the pipe-line or already underway (such as new toll roads,  or expansion of existing toll roads).

TCL's assets may not be infinite life-time,  but TCL as a company itself isn't necessarily a finite company because of those restrictions.   It's a manager of toll roads,  and uses existing revenue streams to create new revenue streams.   It's no different to any business,  customers aren't forever so you get new ones.  They will add value if they can keep deploying cheap capital to high profitability projects.

I'm not really interested in TCL myself,  and I agree,  some of these multiples being paid look ridiculous at face value.  There seems to be a lot of trust that they can source highly profitable new road projects well in excess of their current portfolio.


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## skc (18 November 2015)

Ves said:


> TCL's assets may not be infinite life-time,  but TCL as a company itself isn't necessarily a finite company because of those restrictions.   It's a manager of toll roads,  and uses existing revenue streams to create new revenue streams.   It's no different to any business,  customers aren't forever so you get new ones.  They will add value if they can keep deploying cheap capital to high profitability projects.




That's probably the analogy used by the analysts... although I'd be extremely surprised if they don't use a NPV type calculation to arrive at some valuation.

The big difference here is that, TCL needs to return the concession to the government free of debt. Based on the current cashflow profile... most cash generated is used to pay interest and dividends. There is no repayment of debt from what I've seen. The banks aren't going to just roll the debt when the underlying concession is expired, right?!

Sydney house prices are currently trading at ~30x EBITDA... and we are talking about a bubble. Not to mentioned that the buy owns the house forever (as opposed to just 30 years). 

I am still hoping to be convinced that TCL is merely expensive and not impossible.


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## VSntchr (25 November 2015)

Very interesting posts above SKC, interesting to look at the situation from a few different perspectives.

MQA just released their 2015 investor pack. They say it is designed to help analysts build their models. Maybe some of the answers to the seemingly absurd valuations lie within THIS .


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## Muschu (4 March 2016)

After a great run recently is this a correction on the back of no news occurring?

I am no chartist and hold TCL and would be pleased to get an opportunity to add more. 

Anyone with TA experience care to suggest where the next support level is?

Many thanks.


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## Triathlete (4 March 2016)

Muschu said:


> After a great run recently is this a correction on the back of no news occurring?
> 
> I am no chartist and hold TCL and would be pleased to get an opportunity to add more.
> 
> ...




Looking at the weekly chart suggests that the stock has pulled back on a number of occasions 38.2% retracement from recent highs before continuing higher.

If the same occurs this time $10.60 seems like a support level to me.

Just an opinion not advice though.


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## Muschu (4 March 2016)

Triathlete said:


> Looking at the weekly chart suggests that the stock has pulled back on a number of occasions 38.2% retracement from recent highs before continuing higher.
> 
> If the same occurs this time $10.60 seems like a support level to me.
> 
> Just an opinion not advice though.




Thanks TA... But worth more than 2 cents


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## Muschu (3 February 2017)

Starting to look a tiny bit better?


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## Knobby22 (7 February 2017)

Bought some more at $10.55 at open.
The worries about analysts with regard interest rates is a them just being overwrought, everyone is in the same market.

Toll revenue growth is 10.9% EBITA growth 12.2%.
Traffic growth 4.8% particularly good in Brisbane and Washington.
Melbourne went backward but that is because of the extensive road works which annoy me at present and encourage alternate routes.

The pipeline for future projects and upgrades is very impressive. Long term buy.


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## just_jay (7 August 2018)

FY18 results released today.

Highlights:

• FY19 distribution guidance of 59.0 cps
• FY19 distribution guidance of 59.0 cps will be maintained in the event of a successful WestConnex bid
• Linkt tolling brand now active across Sydney, Brisbane and Melbourne, incorporating fee reductions and enhanced digital platforms for our customers
• Continuing focus on customer experience:
o Initiatives to improve customer assistance and reduce tolling debt and fines
o Voice of Customer program improves customer interactions
• Connected Automated Vehicle (CAV) trials underway across Australia and North America with the first Australian public trials of a highly automated vehicle occurring on CityLink
• Acquisition and financial close of A25 in Montreal providing second geographical market in North America
• Completion of the CityLink Tulla Widening and Monash Freeway Upgrade Projects in Melbourne providing travel time savings to customers
• Statutory profit from ordinary activities of $468 million
• Average daily traffic (ADT) grew by 2.2%2 inclusive of disruption from upgrade projects including CityLink Tulla Widening (CTW), Monash Freeway Upgrade (MFU), Logan Enhancement Project (LEP), Gateway Upgrade North (GUN) and Inner City Bypass (ICB)
• Proportional toll revenue increased by 8.7% to $2,340 million
• Proportional earnings before interest, tax, depreciation and amortisation (EBITDA) and before significant items increased by 10.2% to $1,796 million1
• FY18 distribution of 56.0 cents per security (cps) including the impact from $1.9 billion of equity raised to support the West Gate Tunnel Project


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## just_jay (7 August 2018)

Nice pick up in volume today (half of which occurred after 4pm) afer release of results. Price pierced resistance zone created by VCB on 15/06.  Watch the ACCC decision date for WestConnex project on 06/09/18. 

SL - 11.60


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## Knobby22 (31 August 2018)

They got Westconnex as hoped.
Now they are in the same dominant position in Sydney as they are in Melbourne.
They were going to spin off a lot of cash but now with this acquisition the new debt is large so a rights issues is occurring.


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## JTLP (1 September 2018)

Knobby22 said:


> They got Westconnex as hoped.
> Now they are in the same dominant position in Sydney as they are in Melbourne.
> They were going to spin off a lot of cash but now with this acquisition the new debt is large so a rights issues is occurring.




I find this intriguing. A day before the ACCC says no issue with contesting. Next day secured. How could somebody not be in the know?


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## Knobby22 (1 September 2018)

JTLP said:


> I find this intriguing. A day before the ACCC says no issue with contesting. Next day secured. How could somebody not be in the know?



They must have had clearly a better offer so they did the tender work in expectation of approval. They must have thought approval was likely.


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## tinhat (1 September 2018)

JTLP said:


> I find this intriguing. A day before the ACCC says no issue with contesting. Next day secured. How could somebody not be in the know?




Surely it is obvious to all that, in general, public interest oversight by government agencies and authorities has been rendered a hollowed-out facade; a smoke-screen for vested interests? It doesn't matter whether we are talking about financial markets, financial services, environmental protection, consumer interests.


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## DNA2013 (6 September 2018)

What do people think of TCL as a "moat" stock? from this article?
https://mywealthforlife.com/transurban-ltd-share-review-asx-tcl/


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## bigdog (12 February 2019)

M Fool Reported
https://au.finance.yahoo.com/news/transurban-share-price-buy-profit-230650417.html

This morning Transurban Group  (ASX: TCL) reported its half-year results for the period ending December 31 2018. The toll road operator posted a profit from ordinary activities of $145 million (down 56%) on revenue of $1,286 million, which is up 30.2%.

The company reported that on a proportional basis EBITDA (operating income) increased 9.9% to $1,001 million, which translated into free cash flow of $715 million left over to feed investors’ hunger for dividends.

A total interim dividend of 29 cents per share was declared, compared to 28 cents per share in the prior corresponding half. The company also maintained guidance for a final dividend of 30 cents per share to take full year dividends to 59 cents per share.

This places the stock on a yield of 4.7%, although it has already gone without the rights to the 29 cents per share payout. The group has previously stated it aims to grow fiscal 2020’s dividends at a mid-single-digit rate.

The net profit was dragged down despite toll road revenue growth by ballooning costs across a number of line items on its profit and loss statement including interest on debt costs, depreciation, construction costs, and employee expenses.

The rising costs reflect a debt-driven expansion push by the group with it undertaking nine new toll road development projects over the next 5 years including the major WestConnex development in Sydney that is estimated to have a total cost of $16.8 billion, excluding airport gateway costs.

Its being funded largely by public sector debt collateralised against future toll road revenues, with Transurban recently raising $4.8 billion to take its share of the giant project.

Fortunately for investors Transurban has a good relationship with governments as shown by its sky-high gross profit margins (EBITDA of $1,001 million on proportional revenue of $1,286 million) and pricing power, as it’s able to lift tolls for drivers who commonly have no choice but to pay if they want to travel to their destination.


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## just_jay (12 February 2019)

A blurb from the SMH markets blog
https://www.smh.com.au/business/markets/markets-live-20190212-h1b51i.html
*****

We've got hold of Macquarie's flash note on Transurban's results. Shares are currently down 2.3 per cent at $12.17. The price had been at a 13-month high of $12.46 yesterday.

Macquarie analysts write that Transurban's earnings before interest, tax, depreciation and amortisation (EBITDA), (ex transaction costs) was $1 billion, consistent with expectations. Sydney roads EBITDA is $418 million versus Macquarie's expectations of $414 million. Traffic stabilised in the fourth quarter, with a better road performance from M7 offsetting WestConnex's contribution (~$10m). M4 volume of 1.5 per cent may seem low but reflects the pace of the road ramp-up and the broad economy.

Citylink [in Melbourne] at $363 million was $10 million below expectation, with a soft fourth quarter traffic at 3.7 per cent along with lower fee revenue. This is a net disappointment.

Transurban Queensland performance $146 million was a little disappointing. Airportlink was the major variance, with costs materially higher than the same period in 2017. Traffic remains soft for the business, as the effect of road works still hampers Gateway and Logan Motorway. Free cashflow was $715 million well above our expectation of $656 million. 2018-19 was always a transition year. The result meets our expectation, but there are signs of a tough second half of 2018-19 traffic environment which will see some pressure on EBITDA growth.


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## just_jay (21 March 2019)

Some large volumes going through this morning in the first half hour of trade.


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## Smurf1976 (22 March 2019)

Price is up nicely over the past few months from a low of 10.62 in October 2018 to yesterday's close of 12.79

A word of caution however as there are a number of previous tops at approximately this price in 2016 and 2017.


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## Cam019 (24 March 2019)




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## Knobby22 (24 March 2019)

What are you saying Cam? The long term signal white is up now?
What does the purple line mean.


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## rederob (24 March 2019)

Smurf1976 said:


> Price is up nicely over the past few months from a low of 10.62 in October 2018 to yesterday's close of 12.79
> A word of caution however as there are a number of previous tops at approximately this price in 2016 and 2017.



Technically TCL is on blue sky territory - having broken above all previous highs.
Until interest rates are likely to be increased, flights to the likes of TCL should prevail.


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## Cam019 (24 March 2019)

Knobby22 said:


> What are you saying Cam? The long term signal white is up now?
> What does the purple line mean.



I'm not really saying anything except there has been 4 entry signals for my system in the last 7 weeks. I was just posting charts to possibly create some discussion in charts I would be interested in this week.

The white dashes represents my wider ATR trailing stop and the purple line is a donchian channel representing the highest price the stock has traded at over the last 'n' candles.


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## Knobby22 (10 September 2019)

I took up the SPP.
To me the company looks safe, consistent growth, increasing dividends. It is highly geared to reduce tax and should interest rates rise or a road building runs over budget are some of the risks.

I think they are too well run to get in trouble  and there model is hard for government to resist.


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## Knobby22 (8 November 2019)

TCL announced they have refinanced the 1.65mil syndicated bank facility on favourable terms but do not provide those terms, I suppose we have to read between the lines.

Opening of the new tollway in Washington USA on time and on budget was good news.


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## rederob (8 November 2019)

Knobby22 said:


> TCL announced they have refinanced the 1.65mil syndicated bank facility on favourable terms but do not provide those terms, I suppose we have to read between the lines.



@Knobby22  - just to be clear, it's actually A$1.65 *billion*.


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## Knobby22 (14 February 2020)

Thought latest results were quite good.
Can they keep up the growth?
Cashflow is fantastic, profit (before interest expense) is a beautiful thing.

The only fly in the ointment I can see is the  increased competition in this space.


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## rederob (14 February 2020)

Knobby22 said:


> Thought latest results were quite good.
> Can they keep up the growth?
> Cashflow is fantastic, profit (before interest expense) is a beautiful thing.
> 
> The only fly in the ointment I can see is the  increased competition in this space.



Not sure there is any real competition in Oz.
Their investor presentation shows a clear pathway to increasing profits, with 2 major project opening new revenue streams mid year.
They have 5 other projects completing over the following 4 years.
They also get increasing amounts of franking into their dividends going forward, so that's an added bonus.
I also had this future thought about EVs and tolls that was along the lines of: I am not paying for petrol anymore so I can get to and from work quicker and it won't cost me much more than before. Just a thought!
I hold TCL and as it's a lot better than bank interest, I will look closely for any headwinds that offer a chance to pick up some more at a discount.


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## hja (18 May 2020)

I guess its lovely bull flag-planting run has come to end!


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## hja (20 May 2020)

Little selling pressure... heh I guess many SP200 charts look similar.


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## Dona Ferentes (12 August 2020)

Transurban shares were sitting at $16.34 in mid-February before the pandemic hit Australia but plummeted to near $10 in the depths of the sudden sharemarket sell-off by March 23. The stock has since recovered to about $14.

Transurban chief executive Scott Charlton is looking over the horizon to when restrictions ease and economic conditions improve. He expects road traffic numbers will pick up sharply again.







> "As you come out of government restrictions the recovery, particularly on the road, happens quite quickly,” Mr Charlton said.




But in the short-term Transurban is doing it tough. Average daily traffic on the group's CityLink toll road in Melbourne, which usually produces about a third of the group's earnings, was down by about 63 per cent in the first week of August as the southern city went into a hard lockdown. The fall-off in July was 48 per cent, when Melbourne entered into a stage-three lockdown.

Traffic across all of the toll road group's operations was down 25 per cent in July.
Transurban said it _*did not expect to breach any debt covenants*_ within the next 12 months, although some of its toll road assets would enter "distribution lock-up" which means they cannot pay out cash to the parent company.

- _debt levels are always the issue._


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## peter2 (12 August 2020)

I'm disappointed that TCL wasn't sold off a lot more. I'd like to buy some near 11.50. Perhaps if NSW goes into another lock down price should go lower. 

I'm also monitoring ALX. I want it much lower also.


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## mullokintyre (10 August 2021)

Transurban may come under a bit of Pressure.
The  West Gate Tunnel was supposed to be finished next year, but due to a bit of argy bargy between Trans urban and its subcontractors, not only will it not be done by then, TCL are unwilling to give a date when it will.
The project is at least 3.5 billion over budget (some say its 5 billion over), with the liklihood that it will go higher.
The tunnelling machines supposed to start under ground boring in 2019 are still sitting idle.
Can't see it getting underway any time soon.
The good news is that Ghengis Dan allowed TCL to keep increasing the Tolls on the existing roads by 4,5% a year, so that according to deloittes, TCL will pick up a cool 37.5 bill over and above its existing incomes.
The Bad news is that under the current climate, there is no way that Ghengis dan will come to the party and have Vic taxpayers chip in for the cost overun.
The other Bad news is that if Ghengis Dan were to suffer the unfortunate fate of losing the next election, the Libs will be determined to blame whatever they can on the labour government, and most likely bring in regulation to curtail some of its activities.
Despite bleating about soverign risk etc when Labour cancelled one of their pet projects and paid out 1 billion to the contractors,  they would have no hesitation in promising the vic public they would rip up the TCL contracts if they thought it would help electorally.
Not sure if I want any of my money in this once generous cash cow.
Mick


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## peter2 (10 August 2021)

Westgate Tunnel and the current lockdowns were always going to be spoilers for *TCL*. The price has held up very well IMO. 

The price is falling after their recent news., finally. I'd like to 12.50 of lower. *TCL* is in my reversal watch list for a purchase in a conservative longer term portfolio. They've got gov't support to collect and increase tolls as they want. It'll be a cash machine again when the restrictions end.


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## sptrawler (10 August 2021)

peter2 said:


> Westgate Tunnel and the current lockdowns were always going to be spoilers for *TCL*. The price has held up very well IMO.
> 
> The price is falling after their recent news., finally. I'd like to 12.50 of lower. *TCL* is in my reversal watch list for a purchase in a conservative longer term portfolio. They've got gov't support to collect and increase tolls as they want. It'll be a cash machine again when the restrictions end.



One has to wonder what is keeping the price up.


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## divs4ever (10 August 2021)

Super Funds  , remember most are rushing towards ESG

 HOWEVER some Super Funds are lending out shares to create extra income ( Norges for example  , but others like Vanguard lend shares out as well )

 now IF somebody wants to create a downtrend  , the next few days would be an excellent time


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## rederob (10 November 2021)

With Transurban's October purchase of WestConnex - via a 50% holding in Sydney Transport Partners - and most regions where it has assets returning to pre-pandemic traffic levels, TCL's share price downside risk is low.  Recent settlement over a toxic soil dump site for the Wet Gate Tunnel project is expected to see tunnelling machines back in action early in the new year (Ie. once the Bulla soil disposal site is readied).


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## rederob (1 June 2022)

That upside breakout that looked to be on the cards actually turned out to be the opposite for a number of months until post-pandemic traffic levels surged again in Queensland and NSW.  This was reflected in the average daily trip data for the March quarter (latest available):




And  early April data for Qld/NSW:




And clearly shows up in the share price:


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## peter2 (13 July 2022)

*TCL* on my "buy the dip" watch list but price remains reasonably strong.


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