Qube Holdings Ltd (QUB)
HOLD

Softer growth ahead

 24 Aug 2023
Sector: Industrials

RESULTS

Need To Know

  • Earnings inline, dividend +5% ahead. QUB delivered +16% revenue growth, +21% NPAT growth, and dividend growth of +28% in FY23. 
  • Outlook points to further growth in FY24, albeit at a lower growth rate than FY23.  
  • QUB’s return on capital 9.1% vs QUB's target of >10%, which could be met in FY24.
  • Expect little change to consensus estimates for FY24. 

FY23 Result Overview (vs consensus)

EBITDA $464m vs $466m

NPAT $225m vs $224m

EPS $0.136 vs $0.13

DPS 8.6cps vs 8.0cps. 100% franked.

Operating cash flow $498m, implying 107% cash conversion relative to 71% in FY22.  

Balance sheet: net debt/EBITDA 2.0x or 24% geared (vs 30-40% range). Liquidity $1bn of cash and debt capacity.

Return on Average Capital Employed (ROACE) 9.1% up from 8.1% in FY22. QUB has a 10% target for ROACE.

Outlook: less specific than FY23, but points to growth in FY24. Contributions from Kalari and Pinnacle acquisitions (mid-2023) are expected to contribute, along with benefits from recent contract wins.

Investment Implications

QUB’s results reflect the work of many years of bolting together critical logistics infrastructure. QUB remains agile and focused on growing market share and earnings.

Looking into FY24, both volumes and earnings growth are likely to slow given macro conditions in Australia/NZ and China. Despite that outlook, QUB has called out Jul 2023 - QUB's container volumes were the highest on record (QUB lost some market share in FY23).

Overall expect minimal changes to consensus estimates, which currently assume just 3% earnings growth. A more positive rating is dependent on evidence of an acceleration in economic activity, further market share gains or peaking in long-dated bold yields. Retain the Hold.

View the latest Research Report

Stock Overview

Share Price

Company Overview

Qube Holdings Limited is an Australia-based company, which is engaged in providing logistics solutions across multiple aspects of the import-export supply chain. Its divisions include Qube Logistics & Infrastructure and Qube Ports & Bulk. The Qube Logistics operates services covering road and rail transport, warehousing and distribution, container parks and related services, and intermodal logistics hubs, including rail terminals and international freight forwarding. Qube Ports is a specialist integrated port services provider, providing bulk and general handling facilities in over 40 Australian, New Zealand and South East Asian ports. It offers purpose-designed solutions for handling containers, bulk, automotive and general cargo. Qube Bulk provides customers with the full range of bulk material handling services, including road and rail transport, stockpile management, and bulk ship loading. Qube Bulk specializes in large-scale bulk export facilities and bulk material supply chains.

Disclaimers and Disclosures

Issuer

The information and opinions contained within Sandstone Insights Research were prepared by MST Financial Services Pty Ltd (ABN 54 617 475 180, AFSL 500557) ("MST").

Reliance

Whilst MST make every effort to use reliable, comprehensive information in the construction of its reports, MST make no representation, warranty or undertaking of the accuracy, timeliness or completeness of information in this report. Save for any statutory liability that cannot be excluded, MST and MST employees, representative and agents shall not be liable (whether in negligence or otherwise) for any error or inaccuracy in, or omission from, this advice or any resulting loss suffered by the recipient or any other person.

General Advice

Any advice contained within Sandstone Insights Research is general advice only and has been prepared without taking into account any person’s objectives, financial situation or needs. Any person, before acting on any advice contained within Sandstone Insights Research, should first consider consulting with a financial adviser to assess whether that advice is appropriate for their objectives, financial situation and needs. 

General Disclosures

This report should be read in conjunction with MST Disclaimers and Disclosures and is published in accordance with MST Conflict Management Policy which are available on the MST website: https://www.sandstoneinsights.com.au. 

Currency of Research

The recommendations made in a Sandstone Insights Research report are current as of the publication date. If you are reading a report materially after publication, it is likely that circumstances will have changed and at least some aspects of the analysis may no longer hold.

Access and Use

Any access to or use of Sandstone Insights Research is subject to the Terms of Use. By accessing or using Sandstone Insights Research you hereby agree to be bound by our Terms and Conditions and hereby liable for any monies due in payment of accessing this service. In addition you consent to us collecting and using your personal data (including cookies) in accordance with MST Privacy Policy, including for the purpose of a) setting your preferences and b) collecting readership data so MST may deliver an improved and personalised service to you. If you do not agree to MST Terms of Use and/or if you do not wish to consent to MST use of your personal data, please do not access this service.

Equities Research Methodology

Please click here for information about MST equities research methodology.