BondEvalue

Credit

<img class="aligncenter" src="https://cdn2.hubspot.net/hub/2749033/hubfs/US%20Benchmark%20%26%20Global%20Indices%209%20Sep.png?upscale=true&amp;width=1400&amp;upscale=true&amp;name=US%20Benchmark%20%26%20Global%20Indices%209%20Sep.png" alt="US Benchmark &amp; Global Indices 9 Sep" width="801" height="427" align="center">
Technology stocks led a sharp sell-off overnight. Investors in the US returned after the Labor Day holiday feeling bearish and in the mood for profit taking mostly because of the news that SoftBank’s option purchases helped to trigger the recent rally. Nasdaq declined 4.11% led by the massive decline of 21.1% in Tesla and declines of 4.1%, 4.4%, 5.4% and 6.7% in Facebook, Amazon, Microsoft and Apple respectively. A drop in oil below $40 per barrel caused sizable losses in the energy sector. A…

Morningstar

Morningstar, Inc.

Equity Bottom-Up

Transurban Group’s investor day reiterated its focus on successfully delivering its large development pipeline and delved into some of the potential longer-term growth opportunities. We continue to believe it is a high-quality company, warranting a wide economic moat rating. But the recent rally in bond prices has pushed its security price above our unchanged AUD 11.50 fair value estimate. As such, we believe the stock is moderately overvalued. Fiscal 2019 distribution yield is just 4.3%…

Transurban reported proportional traffic growth of 2.3% in the March quarter, with solid growth across most regions. We marginally upgrade a few of our short-term traffic growth assumptions and reduce our medium-term interest rate expectations following recent weakness in global bond yields. We estimate Transurban can issue 10-year debt at interest rates around 4% at present, and forecast rates normalise towards 5.8% over the longer term. Our fair value estimate increases 4% to AUD 11.50. At…

Wide-moat Transurban’s first-half fiscal 2019 underlying proportionate EBITDA increased 10% to AUD 1.0 billion, in line with expectations. Key drivers were solid traffic volume growth in most markets, toll increases and three acquisitions. Unchanged distribution guidance points to AUD 0.59 per security in fiscal 2019, with mid-single-digit growth in 2020. Distributions will need to be supported by debt in coming years--what management refers to as a capital release--because of equity dilution…

Traffic growth was fairly soft in most markets in the September quarter 2018. Slowing growth appears to be more than just related to roadworks and other one-offs. Some assets are maturing faster than expected while others are likely impacted by cost of living pressures, leading us to downgrade our medium-term growth expectations modestly. We trim our fair value estimate 4% to AUD 11. At the current price, the stock is fairly valued. The firm's wide moat rating remains intact. We also adjust…

Australia

Transurban Group owns and operates urban toll road networks. The Company has core capabilities in network planning and forecasting, operations and customer management, project development and delivery, technology application, and community engagement. Transurban operates in Australia and North America.