Atlas Arteria Limited (ASX: ALX)

Atlas Arteria Limited (ASX: ALX) is a global owner, operator, and developer of toll roads. The ASX-listed company has a portfolio of five toll roads in France, Germany, and the United States. The company-managed roads aim to benefit communities through reduced travel time, greater time certainty, and reduced fuel consumption and carbon emissions. ALX owns a 31.14% interest in the APRR toll road group in France, 66.67% interest in the Chicago Skyway, 100% of the economic interest in the Dulles Greenway, and 100% of the Warnow Tunnel.

Recommendation Rationale – SELL at AUD 5.03

• Decline in Traffic: ALX saw a 0.4% year-on-year decline in traffic for the first half of FY24. Traffic decreased 0.7% for APRR Group.
• Decline in Net Profit After Tax: In 1HFY24, net profit after tax reached AUD 114.2mn, down 16.3% year-on-year.
• Overvalued Multiples: On a forward 12-month basis – key trading multiples (EV/EBITDA and EV/Sales) are higher than the median of transportation sector.
• Risks: Regulatory changes, traffic volume fluctuations, infrastructure maintenance costs, currency fluctuations, and interest rate sensitivity may affect the company’s financial performance and stability.

ALX Daily Price Chart

ALX Daily Technical Chart (Source: REFINITIV)

Given its current trading levels, recent rally in the share price, and risks associated, it is prudent to exit this stock at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 5.03, at 2:25 PM AEDT, as of 21 January 2025.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 21 January 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Dividend Yield may vary as per the stock price movement.

Note 5: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.