Rail freight business AZJ rallied almost 4% yesterday after delivering a solid first half result with EBIT a slight beat of 3% at $454m being the focal point. Coal volumes have been weak to start the year, tracking around 10% below last forcing AZJ to downgrade haulage expectations for the full year by ~5% to 200-210mt before a rebound in FY22. The bulks side of the business continues to do well with revenues up 8%. There remains around $50m in the buy-back kitty (out of the $300m buy back), which could also be topped up with the sale of their Acaciaridge Terminal on track for completion in March.
The risk / reward actually looks great for the yield hungry local investor with a forecast yield of ~7%, especially as dividends are ~70% franked.
MM is now considering AZJ for income
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