Shares in toll road operator Atlas Arteria (ASX: ALX) were -3% lower at the close today, after posting net profit after tax excluding notable items of $179.1m for the year ended in December 2021, up from $26.2m in 2020.
Notable items reflected the capital restructure at Warnow Tunnel and foreign exchange adjustments.
Management guided to a second half distribution of 20.5¢, which will result in a record 36¢ for the 2021 year.
The company, which currently derives the lion’s share of its revenues from its 31% ownership in French toll road operator APRR, noted that the introduction of the EU health pass and the general easing of covid restrictions last year led to a “strong” recovery in the traveling season in France.
While still below 2019 levels, weighted average traffic in 2021 was 18.6% higher than 2020. APRR recorded its highest second half traffic performance to date while the Dulles Greenway still feels the impact of delayed plans to return to office-based work.
Atlas also completed the capital restructure of its 100%-owned Warnow Tunnel, a 2km toll road in Rostock, Germany, and recorded a -4.3% fall in traffic during the period, to 4.37m vehicles in 2021.
Noting that the APRR motorway network in France accounts for around 85% of Atlas Arteria's share valuation, Morgans notes the fourth quarter rebound for APPR traffic – the highest record ever.
The broker maintains an Add rating, and due largely to lower foreign exchange rates increases the target price to $6.91 from $6.78. (28/01/22).
Despite a mish mash of traffic levels in the fourth quarter and early 2022, Morgan Stanley points to a constructive traffic outlook in the coming year as positive for Atlas Arteria.
The broker retains an Overweight rating and target price of $6.66. (28/01/22).
Atlas Arteria's leverage to better traffic (car) volumes and a lower tax rate has seen Macquarie increase its target price to $7.11 from $6.87.
Consensus on Atlas Arteria is Moderate Buy.
Based on Morningstar's fair value of $5.98, the stock looks Overvalued.
A three month snapshot on Atlas Arteria share price
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