Aurizon Holdings: 1H22 Earnings

Aurizon Holdings is under Algo Engine buy conditions. 1H22 underlying EBITDA was down 1.5% to $727m and underlying NPAT was $257m.

We expect Bulk to continue being strong, with record crop production across Australia and new
contracts, although a soft volume outlook for Coal leaves low single-digit earnings growth at best for FY22.

The dividend was $0.105 with a payout of 75%. The forward div yield is now 5.7% and EPS growth likely to be flat to +2%. OneRail transaction is progressing with key ACCC assessment due in

Aurizon Holdings

Aurizon Holdings FY20 earnings beat expectations with EBIT of $910m, this was within the mid point of FY20 guidance of $880-930m.

FY21 EBIT guidance was 6% lower than consensus. Forward yield remains attractive at 5.%. Little in the way of EPS growth and a 100% dividend payout ratio provides a cap to the upside.

AZJ has initiated a new $300m on-market buyback which will help underpin the stock price. This is a good candidate for an at-the-money buy-write to drive portfolio cash flow.