Rail freight company AZJ has fallen -11.3% so far this year courtesy of disappointing 1H23 result – Underlying EBITDA came in 10% below consensus at $673m with the miss mostly attributed to weather disruption across all segments and slower-than expected growth in bulks. The result disappointed because weather factors were known but they hit profitability far harder than expected plus the business is spending on growth for the bulk markets which dilutes the stocks appeal as a solid yield play – i.e. this has turned from a yield story, to one of future growth which creates an ‘air pocket’ in the share register.
- We see no reason to chase AZJ until its growth strategy starts to deliver.
MM is neutral AZJ around $3.30
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