Asciano Group (AIO) Technical Update

Submitted by Jim Thesiger on 7 May, 2008 - 05:31

Asciano Group (AIO) instituted a lowermost in March 08 and is creeping higher as credit concerns in the market hit begun to ease from Australian stockmarket analyst Macquarie Research Equities.

Jumping off the Grain Train

Asciano (AIO) - Neutral

AIO has struggled heavily of late as concerns around the gearing levels of AIO has seen investors desert the stock of recent times. AIO found a bottom in March 08 and has been gradually creeping higher as credit concerns in the market have begun to ease.

Source: IRESS

Asciano Group (AIO) Fundamental Analysis

Macquarie Research Equities (MRE) Fundamental View:

1. AIO today announced the conclusion of grain negotiations. AIO has effectively obtained take or pay contracts for eight of 25 trains in it’s export fleet as 5 domestic trains
2. This negotiation has eliminated grain losses within the AIO business, and could even see the business return a modest profit in coming years. Most importantly the losses have been eliminated.
3. There is still some cyclicality in earnings for AIO , however this includes the possibility of upside in bumper crop years.
4. This and the Saudi land bridge represent significant steps forward within AIO. The 2 key issues for AIO now remain as Qld Coal negotiations and addressing balance sheet issues. Management’s recent success in shows greater ability to deliver on stated goals and improves our confidence in them.