Tuesday 01 September 2015
Investing in infrastructure
Tuesday 01 September 2015
Read our regular update below, keeping you informed about the latest infrastructure news, trends and developments.
Transurban details proposed Melbourne Western Distributor
Toll road operator Transurban Group held its annual Investor Day in May with CEO Scott Charlton outlining key attributes of the proposed Western Distributor project in Melbourne, which we believe has the potential to add value if it proceeds.
Charlton also shared his objective to have one active network enhancement project in every market at any one point in time, which supports our long held view that the “option value” inherent in its networks provides Transurban with a number of value enhancing growth opportunities that are not fully appreciated by the market.
We continue to believe that there is a strong alignment of interests between Transurban’s management team and shareholders in terms of seeking long-term dividend growth as a result of harnessing the value of toll road networks in Melbourne, Sydney and Brisbane.
The key drivers of Transurban’s dividend growth will be:
- Strong underlying network traffic;
- Embedded price escalation across concessions;
- Operational efficiencies across technology, operations and maintenance; and
- Traffic uplift from development projects
Ports and software … creating efficiencies
We recently travelled to both Japan and Hong Kong to meet with eighteen companies.
In Hong Kong, the main highlight was a site visit to the operations of Hutchison Port - one of the most efficient port operations in the world. Located near the Pearl River estuary, just to the west of Tuen Mun, the port is well positioned to handle the growing volume of shipments within the Pearl River Delta (PRD) - one of the main hubs of China's economic growth.
We got to spend some time in the control room at the port and saw the live workings of Hutchison Port’s proprietary software program. The software allows the port operators to track, identify and show where each container is at any point in time. This proprietary software program is used at all of Hutchison’s ports across the globe.
The visit provided us with great insights into how a global leader like Hutchison Ports works to achieve best practice and how proprietary software can provide companies with a real competitive advantage. The visit deepened our understanding of the potential for future efficiency gains not only for Hutchison’s ports, but for other ports across the globe that we may invest in the future.
More Infrastructure required!
This month our New York based analysts attended a conference in New York hosted by the government of Brazil, which was hosted by the President and senior ministers. It highlighted the continuing need for the development of infrastructure assets in Brazil. The message was clear – Brazil needs foreign investment and the government will be increasingly supportive of private investment. This is a continuing trend amongst governments around the world as they seek to provide the infrastructure needed to support their economy and people.
This infrastructure update is from Macquarie Investment Management's Infrastructure Securities Team.