The Transurban (ASX: TCL) share price is down 4% in early trading after the toll road business announced its March 2020 traffic update.
What is Transurban?
Transurban owns and operates 15 toll roads in Melbourne, Sydney, and the greater Washington area. Revenue growth is derived from traffic growth and their very own rivers of gold – inflation protected toll prices. CityLink in Melbourne is Transurban’s biggest asset, in 2018 this accounted for approximately 32% of their total toll revenue – working out to be about twice the size of the roads in Brisbane.
Transurban’s traffic numbers
Transurban said that during the March quarter average daily traffic (ADT) decreased by 4.8% with all assets and markets significantly impacted by the restrictions in movement.
Looking at the individual areas:
Sydney traffic decreased by 5.2%, though freight corridors like Westlink M7 experienced higher levels of activity.
Melbourne traffic decreased by 6.7%, though pleasingly large vehicle traffic increased by 1.6% over the quarter.
Brisbane traffic decreased by 2.2% but large vehicle traffic rose by 1.1%.
North American traffic increased by 2.1%. However, the 95 Express Lanes average toll price decreased 3.9%, the 495 Express Lanes toll price decreased 3.9%. Tolls have been suspended for the A25 in Montreal with compensation arrangements under the contract.
Any April traffic information?
Transurban gave out some provisional numbers for the 5 April 2020 week. Sydney traffic was down 40%, Melbourne traffic was down 53%, Brisbane traffic was down 38%, North American traffic was down 69%. Overall, Transurban traffic was down 47%.
Is Transurban a buy?
Transurban is suffering. It isn’t as defensive as some people had hoped, though this situation is unprecedented. It really depends how long life gets back to normal. If traffic resumes sooner rather than later then it could be an opportunistic buy. It’s not a buy for me though. But I prefer the idea of buying technology shares like these:
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Disclosure: at the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.
