Business SummaryAurizon Holdings Limited (AZJ) is an Australian rail freight operator company.The company transports more than 250 million tonnes of Australiancommodities, connecting miners, primary producers, and industry withinternational and domestic markets. It provides customers with integratedfreight and logistics solutions across a national rail and road network,traversing Australia. AZJs operations include Network, Coal and Bulk.

Network: This business operates and provides access to the CentralQueensland Coal Network (CQCN). It provides maintenance and renewal ofNetwork assets. The division provides design, construction, overhaul,maintenance and management services to the Group, as well as externalcustomers.

Coal: This business provides a critical link in Australias major coal chainsystems for the majority of Australias coal producers. The coal transportoperation links mines in the Newlands, Goonyella, Blackwater, Moura andWest Moreton systems in Queensland and the Hunter Valley, including Ulanand Gunnedah coal systems, in New South Wales to domestic customersand coal export terminals.

Bulk: This business involves transport of bulk mineral commodities includingiron ore, agricultural products, mining and industrial inputs, and generalfreight throughout Queensland and Western Australia.

Latest Research1H21 Result – Downgrade to Neutral

Commencement of WIRP fees drives upgraded guidance – The mid-pointof full year underlying profit guidance was increased $35 million. However,this was effectively driven entirely by $40 million of retrospective EBITrecognised in relation to the Wiggins Island Rail Project.

For more information see full research report 17 Feb 2021.

GICS - Transportation

Aurizon Holdings Limited

ASX Code: AZJ Price: $3.83 12 Mth Target Price: $4.28 Rating: Neutral

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Snapshot

DateMarket Cap.Shares on issue12 Month High12 Month Low

27 April 2021$7,050m1,840.7m$5.07$3.59

RatingRating12 Mth Target Price

Capital GainGross Yield

Implied Total Return

Neutral$4.2812.0%8.0%20.0%

Investment FundamentalsFYE 30 Jun 2020A 2021F 2022F 2023F

Profit $m 531.0 519.0 499.0 504.0Profit (norm)* $m 531.0 519.0 499.0 504.0

EPS* ¢ 27.0 28.0 27.0 28.0EPS Growth % 12.5 3.7 -3.6 3.7P/E* x 14.1 13.6 14.1 13.6P/E Relative % 0.0 0.0 0.0 0.0

DPS ¢ 27.0 28.0 26.0 27.0Yield % 7.1 7.3 6.8 7.1Franking % 70.0 70.0 50.0 50.0* Adjusted for goodwill and unusual itemsSource: Based on Citi estimates

Share Price Chart

Total Return on $10,000 Investment

Profit & Loss ($M)2016A 2017A 2018A 2019A 2020A

Sales Revenue 3,458 3,375 3,047 2,853 3,017Total Revenue ex. Int. 3,458 3,452 3,179 2,908 3,170EBITDA 1,194 1,421 1,522 1,418 1,490Depreciation & Amort. -561 -585 -526 -543 -559Goodwill Amortisation -- -- -- -- --EBIT 633 836 997 875 931Net Interest -138 -178 -165 -147 -148Profit Before Tax 495 658 832 728 783Income Tax -121 82 -241 -209 -261Outside Equity Int. -- -- -- -- --Profit after Tax 374 739 514 523 533Significant Items after Tax -302 -927 -30 -46 83Reported Profit after Tax 72 -188 483 476 616Preferred Dividends -- -- -- -- --

Cash Flow ($M)2016A 2017A 2018A 2019A 2020A

Receipts from Customers 3,767 3,878 3,475 3,326 3,408Funds from Operations 1,347 1,410 1,415 1,458 1,376Net Operating Cashflow 1,218 1,238 1,308 1,291 1,247Capex -772 -540 -499 -441 -524Acquisitions & Investments -4 -- -- -- -24Sale of Invest. & Subsid. -- 98 -- -- 165Net Investing Cashflow -740 -431 -482 -420 -371Proceeds from Issues -- -- -- -- --Dividends Paid -529 -552 -462 -488 -514Net Financing Cashflow -580 -788 -909 -881 -872Net Increase Cash -102 20 -83 -10 4Cash at Beginning 171 69 89 35 25Exchange Rate Adjust. -- -- -- -- -0Cash at End 69 89 35 25 29

Ratios and Substantial Shareholders2016A 2017A 2018A 2019A 2020A

Profitability RatiosEBITDA Margin % 34.53 42.09 49.96 49.69 49.38EBIT Margin % 18.31 24.77 32.71 30.68 30.86Net Profit Margin % 10.82 21.90 19.38 18.21 17.30Return on Equity % 6.55 14.72 12.49 11.11 11.98Return on Assets % 4.34 8.80 7.25 6.44 6.42

Debt/Safety RatiosNet Debt/Equity % 59.87 65.46 73.30 71.51 85.38Interest Cover x 4.59 4.68 6.04 5.95 6.27

Top 5 Substantial ShareholdersBlackRock Group 7.4%The Vanguard Group Inc. 5.7%

Balance Sheet ($M)2016A 2017A 2018A 2019A 2020A

Cash & Equivalent 69 89 35 25 29Receivables 514 497 531 482 460Inventories 153 112 118 117 146Other Current Assets 7 25 6 7 15Current Assets 844 729 798 740 715Prop. Plant & Equipment 9,719 8,835 8,660 8,536 8,537Intangibles 190 170 173 177 188Other Non-Current Assets 7 25 6 7 15Non-Current Assets 10,024 9,116 8,976 8,962 9,057Total Assets 10,868 9,846 9,773 9,701 9,772Interest Bearing Debt 3,490 3,376 3,502 3,370 3,750Other Liabilities 1,664 1,448 1,541 1,654 1,664Total Liabilities 5,154 4,824 5,043 5,024 5,414Net Assets 5,714 5,022 4,730 4,677 4,358Share Capital 1,207 1,207 907 907 507Reserves 3,425 3,473 3,460 3,418 3,395Retained Earnings 1,082 342 363 352 456Outside Equity Int. -- -- -- -- --Total Shareholders Equity 5,714 5,022 4,730 4,677 4,358

Current Analyst Recommendations *

* Source: Morningstar. This chart shows the spread of recommendations from thosebroker analyst's in Australia with research coverage of this stock.

Principals & DirectorsPrincipals

Company Secretary Mr Dominic D Smith

Directors

Mr Timothy Michael Poole(Non-Executive Director,Non-ExecutiveChairman)Mr Andrew Thomas Harding(Chief Executive Officer,ManagingDirector)Mr Michael Anthony Fraser(Non-Executive Director)Mr Russell Ronald Caplan(Non-Executive Director)Dr Sarah Elizabeth Ryan(Non-Executive Director)Ms Samantha (Sam) Lewis(Non-Executive Director)Mr Marcelo Bastos(Non-Executive Director)Ms Katherine Elizabeth Vidgen(Non-Executive Director)Mr Lyell Strambi(Non-Executive Director)

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Aurizon Holdings Limited

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