Morningstar places Kelsian Group under review after 'unexpected blowout' in capex
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More news: Morningstar has put its earnings forecasts and fair value estimate for Kelsian Group under review, after the bus and ferry operator revealed an "unexpected blowout" in its capital expenditure outlook, triggering a major sell-off on the ASX.
Kelsian shares dived 22.5% to $1.13 by 2:50pm AEST, making it the worst performing stock across the ASX 200.
What they said: "Management's capital expenditure projection of $180 million to $190 million is almost double our prior expectations," said Morningstar analyst Brian Han.
"We look forward to management shedding more light on these projected capital expenditure increases, when Kelsian reports its fiscal 2024 results on 28 August, 2024," he said.
"The preliminary release of key earnings figures for fiscal 2024 shows robust operating performance. Unfortunately, that is now a sideshow pending an assessment of Kelsian's future capital expenditure intensity and its impact on group returns in the longer term."
Kelsian Group shares dive on high FY25 capex guidance
The news: Shares in Kelsian Group plunged in morning trade on the ASX after the bus and ferry operator's indicative unaudited full-year results revealed higher-than-expected capital expenditure in FY25.
The numbers: Kelsian shares fell 22.2% to $3.90 by 11:40am AEST, making it the worst performing stock across the ASX 200, having shed 40% over the last 12 months.
The group reported statutory net profit after tax of $58 million, up 176.2% compared to the previous year, boosted by full-year gains from its acquisition of US bus company All Aboard America (AAAHI).
Revenue grew 42.2% to $2.02 million, 1.1% ahead of consensus estimates, with underlying EBITDA up 63.9% to $265.4 million, 0.9% ahead of average forecasts.
The context: RBC Capital Markets analyst Owen Birrell said that the result was "largely in-line" but noted that FY25 capital expenditure guidance of between $180 million and $190 million was "well ahead" of consensus forecasts of $97 million.
The key driver of the material capex increase, they said, is Kelsian's $25 million cost increase in South Australia, where new landing facilities are required to service new higher capacity vessels, as well as escalating construction costs for steel, concrete and labour.
Kelsian Group, formerly SeaLink Travel Group, operates transport services in Australia, the USA, UK, Singapore and the Channel Islands.
What they said: "The indicative FY24 unaudited result represents a very strong performance for the business, reflecting the first full year contribution of AAAHI which underpinned the increased revenue and EBITDA margin," said Kelsian managing director and group CEO Clint Feuerherdt.
"The growth momentum across all areas of our business, in particular in the Australian bus and AAAHI business, supports this investment to underpin multiple years of growth in the medium and longer term," he said.
The sources: ASX announcement, RBC Capital Markets research, Morningstar research
