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KLS - KELSIAN GROUP LIMITED


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10 October 2019

 

UPDATE SEALINK INVESTOR PRESENTATION âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ TRANSIT SYSTEMS WA CONTRACTS

SeaLink Travel Group Limited (ASX:SLK) (SeaLink) notes that the Transit Systems Group currently

holds contracts to operate the Claremont (Perth, WA) and Marmion (Perth, WA) bus services. Those

contracts are due to expire in January 2020 and the Transit Systems Group has been in negotiations

with the Western Australian Government and associated transport authorities as preferred tenderer for

those contract areas.

 

SeaLink has today been advised that the Transit Systems Group has been successfully awarded

binding contracts to continue to operate the Claremont (Perth, WA) and Marmion (Perth, WA) bus

services for 10 years commencing in January 2020 and expiring in January 2030.

 

Further SeaLink has today been advised that the Transit Systems Group was awarded a binding

contract to operate a new contract for Joondalup (Perth, WA) bus services for 10 years commencing in

January 2020 and expiring in January 2030

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Updated chart below

 

extract from - Sealink Travel Boards The Transit Systems Bus

The acquisition of Transit Systems Group is expected to transform Sealink Travel into a major operator of metropolitan bus services.

 

-Sealink Travel likely to be re-rated post acquisition

-Significant portion of revenue now subject to long-term contracts

-Sealink Travel now more an infrastructure management business

 

Risks

 

Notable risks, Ord Minnett suggests, include exposure to the variability in passenger numbers on several of the routes the company services. Sealink Travel is also a sole operator on a number of key routes and there is a risk that competition emerges.

 

A significant portion of revenue will be subject to long-term contracts and there is a risk that one or a number of these could be lost, which may have an adverse impact on earnings.

 

Ord Minnett notes around one third of the Transit Systems contracts are due for renewal in the next 12 months, and the company has already been informed it will likely lose the London contract, although brokers expect this is unlikely to be material to earnings. The company asserts it can more than compensate for the loss of the London contract by winning a new route to service the Joondalup region in Western Australia.

 

Broker ratings/targets - FWIW

 

Ord Minnett BUY $5.85

Taylor Collison OUTPERFORM $4.50

Baillie BUY $5.20

 

Read more - https://www.fnarena.com/index.php/2019/10/1...it-systems-bus/

 

 

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I think this evolution is a natural development, to scale up and hopefully counter the TransDev and Keolis type organisations. Macquarie is doing similar, acquiring outer suburban and country bus routes. As to the wasteland that is rail = too hard basket

 

Mostly, the consolidations stem from state governments abdicating their responsibilities (too hard with entrenched unions to reform sensibly). Most public transport only recoups a fraction of the cost, on a passenger per Km basis; the least worst outcome is to try and control the hemorrhaging.

 

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  • 1 month later...

FIRB CONDITION SATISFIED FOR PROPOSED ACQUISITION

OF TRANSIT SYSTEMS GROUP

SeaLink Travel Group Limited (SeaLink) (ASX:SLK) confirms satisfaction of the FIRB Approval

condition contained in the Securities Sale Agreements for the acquisition of Transit Systems Group.

On 8 October 2019 SeaLink announced that it had entered into binding agreements (âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‹Ã…“Securities Sale

Agreementsâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢) subject to certain conditions precedent to acquire 100% of Transit Systems Pty Ltd,

Tower Transit Group Ltd and their broader group of entities (including trusts) (together the âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‹Ã…“Transit

Systems Groupâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢). Part of the agreed consideration for the proposed acquisition includes SeaLink

issuing 72,869,945 SeaLink shares to nineteen vendors (âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‹Ã…“Scrip Vendorsâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢) (representing approximately

33.4% of the total SeaLink shares on issue immediately following completion of the transaction).

 

SeaLink advises that Transit Systems Group has provided written confirmation from the Foreign

Investment Review Board (FIRB) that the Australian Government has no objection under the Foreign

Acquisitions and Takeovers Act 1975 (Cth) (FIRB Approval) to acquisition by Scrip Vendors who are

foreign persons of up to 45% of the issued capital of SeaLink.

 

Completion of the proposed acquisition remains subject to certain customary conditions including

approval of SeaLinkâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s shareholders at the upcoming general meeting to be held at 9.30am Adelaide

time on Wednesday 18 December 2019. Details of the proposed acquisition, resolutions and other

information related to the proposed general meeting, together with instructions for voting, have been

previously announced and sent to SeaLink shareholders.

 

The Directors of SeaLink recommend that shareholders vote in favour of the proposed acquisition, in

the absence of a superior proposal and subject to the Independent Expert continuing to conclude that

the proposed acquisition is fair and reasonable (or not fair but reasonable) to SeaLink shareholders

who are not associated with the Scrip Vendors.

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  • 2 months later...

SeaLink warned that sales for its Captain Cook tourist cruises on Sydney Harbour had been hit hard by the ban on Chinese tourists. This follows a weak finish to 2019 for the ferry operator as the fires and smoke around Sydney hurt total visitor numbers.

 

And the new Bruni Island ferry is too big for Kettering wharf. Specs 101 and they got it wrong.

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  • 1 year later...

from under $3 at the time of Covid lockdowns early last year, Sealink has had a strong recovery, hitting $10 a share in April and holding on to close at $10.36 on Friday

Operations are diversified by transport mode, geography, contract expiry and client base. 91% of annualised revenue now contracted or non-discretionary.

The impact of COVID-19 continues to be well-managed, with commuter transport buses and ferries to island communities continuing to operate as an essential service.

 

And even on the discretionary side ... with recent news that international borders are expected to not open for quite a while, domestic tourism is seen as the only option for many. A boost to consumer spending through tax breaks and a stimulatory budget is likely to trickle into other areas of the economy, supporting domestically focused travel stocks. And the state authorities are advertising their attractions heavily. (of course snap lockdowns are hard to manage)

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  • 3 months later...

and dropped below that $10 line with financial year 2021 results.

 

KEY HIGHLIGHTS

 

• Record underlying NPATA of $74.7m, up 152.6% on prior year, with total revenue of $1.17bn

• Delivered strong gross operating cashflow, strengthening the asset base and balance sheet

• Margin improvement achieved through rostering efficiency, procurement and service changes

• Contract portfolio expanded with organic contract awards in all three operating divisions

• Retained the Singapore Bulim bus contract and awarded an additional contract (SembawangYishun), both 5+2 year terms commencing in May 2021 and September 2021 respectively

• Commenced the (up to) 15 year contract as operator of Brisbane City Council's iconic CityCat, CityHopper and Cross River Ferry network in November 2020

• Renewed three significant bus contracts in Adelaide from July 2020 as well as adding the Outer North bus services contract. Also commenced operations in joint venture to operate the newly franchised Adelaide tram contract. All contracts have a term of 8+2 years.

• Renewals of key strategic marine contracts in Townsville and Darwin

• Acquisition of the Go West Tours business in Western Australia opening up opportunities in the mining and resources sector

• Market leading position in zero emissions and demand responsive transport through battery electric and hydrogen powered buses.

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  • 2 months later...
  • ShareCafe Admin changed the title to KLS - KELSIAN GROUP LIMITED
  • 7 months later...

After getting above $10 in 2021, Kelsian has sold down a bit and now trading around $7.20.

From the last FY reporting, Kelsian results for the half year were delivered in an environment of ongoing COVID 19 related restrictions and uncertainty. The largely contracted earnings base in the Australian Bus and International divisions provided the stability and predictability of earnings expected from a business of this nature. Marine & Tourism was negatively impacted by border restrictions, travel uncertainty and emergence of the Omicron variant over the traditionally busy summer period.

Now an ASX200 company, KLS pays a regular dividend of about 50% of Earnings. Cost base pressures either well hedged or the business can pass these costs on to the end customer

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