Aurizon Holdings' FY22 underlying net profit of $513m was 6% ahead of Ord Minnett's forecast, while the 21.4cps full year dividend payout (10.9cps interim) was a beat compared to the 20.1cps expected.

While higher mobilisation costs in the Bulk division compressed margins, the analyst highlights strong revenue growth of 9% due to new contracts.

Management guided to earnings (EBITDA) of between $1.47-1.55bn in FY23, which included an inaugural contribution from the newly acquired One Rail Bulk. 

Ord Minnett retains a Lighten rating and feels the key to a multiple re-rate resides with greater clarity on the East Coast Rail divestment and greater Bulk earnings. The target rises to $3.40 from $3.35.

Sector: Transportation.

Target price is $3.40.

© 2022 Acquisdata Pty Ltd., source FN Arena