Money

Post Market Wrap | Service Stream wins 25-year rail maintenance contract for Inland Rail project

Published

4 years ago

March 22, 2022

Michael Kodari - KOSEC Author

This Post Market Wrap is presented by KOSEC – Kodari Securities

Revenue details to be confirmed at contract execution
Strategically significant diversification into rail maintenance
Lendlease Services integration and planned synergies progressing well
FY22 guidance of $120- $125m EBITDA confirmed
Infrastructure investment in green and digital economy supports long term growth

Service Stream Limited (Service Stream or the Company) is an ASX 300 entity providing integrated end-to-end asset life-cycle services to utility, telecommunications and transport asset owners, operators and regulators across Australia. The Company specialises in the design, construction, operation, and maintenance of assets across these networks.

Service Stream employs 4500 people and has access to a pool of over 5000 specialist contractors.

Australia’s largest freight rail project announced

Australian Rail Track Corporation has announced a consortium comprising Service Stream and others to develop 128 kms of rail track, as part of a 1700 km rail line between Brisbane and Melbourne. The $14.5 billion project, known as Inland Rail, is a once in a generation nation building project that includes a 6.2 km tunnel through the Great Dividing Range.

Structured as a Public Private Partnership, the project includes a 25-year maintenance phase, post construction. This phase will be led by Service Stream and includes planned and preventative maintenance. It opens fresh opportunities for Service Stream by diversifying its contracted transport operations into rail maintenance. Full details of revenue to Service Stream will be confirmed at contract execution.

Solid half-year result

In the 6 months to December 2021, Service Stream grew revenue by 38 percent to $566 million, while EBITDA from Operations declined by 2.3 percent to $39.3 million. Adjusted net profit after tax (before amortisation of customer contracts and non-operational costs) was $16.3 million, down 18 percent, compared to the previous corresponding period. Adjusted earnings per share was 2.84 cents, down from 4.92 cents. An interim dividend was not declared.

The result featured the re-basing of the Company’s legacy Telecommunications business operations as work volumes and mix changed, and the completion of the recently acquired Lendlease Services (LLS) acquisition, in November 2021. The legacy Telecommunications segment recorded a reduction in revenue due to a decrease in NBN activation and assurance volumes, in line with NBN’s strategic plan.

The $310 million LLS acquisition diversifies Service Stream’s maintenance and asset management services across assets that include airports, roads and wind farms. Execution of planned synergies are progressing well with the 50 percent synergy run rate brought forward to 30 June 2022.

Operating cash flow of $78.9 million, up from $58.6 million, was driven by an impressive 234 percent cash conversion rate, boosted by a one-off benefit from the release in working capital built up in LLS, from new LLS contracts mobilised.

COVID-19 impacted preventative and discretionary work volumes across utility operations and construction activities during lockdowns in Sydney and Melbourne.

Looking Ahead

Work in hand of $5.6 billion and net debt of $47.1 million leaves Service Stream well positioned for future growth. The Company’s long term, multi-year contracted revenues with government and private asset owners/operators, covering privileged assets providing essential services, supports dependable future cash flows.

FY22 guidance, including 8 months LLS contribution, expects pro forma EBITDA from Operations of $120 – $125 million. This includes full run rate of LLS synergies of $17 million.

The build out of Australia’s growing infrastructure needs, buoyed by public and private sector investment in the green and digital economy, means that now is an opportune time to be in the infrastructure services market.

This Post Market Wrap is presented by Kodari Securities, written by Michael Kodari, CEO at KOSEC.

Money

New Zealand experiences unexpected economic growth surge

New Zealand economy sees 1.1% growth in third quarter, surpassing forecasts and signalling broad recovery after earlier contraction

Published

1 day ago

December 24, 2025

Harvey Vargas

New Zealand economy sees 1.1% growth in third quarter, surpassing forecasts and signalling broad recovery after earlier contraction

In Short:
– New Zealand’s economy grew by 1.1% in Q3, exceeding expectations after a mid-year contraction.
– Fourteen industries reported gains, with business services and manufacturing leading the growth at 2.2%.

New Zealand’s economy bounced back in the third quarter, growing by 1.1% and exceeding forecasts of 0.9%. This follows a revised 1.0% contraction in Q2, signaling a clear turnaround. According to Statistics New Zealand, 14 out of 16 industries reported growth, with business services and manufacturing leading the charge. Construction also picked up, rising by 1.7%, while exports were boosted by strong dairy and meat sales.

Retail spending showed robust gains, especially in categories sensitive to interest rates, including a 9.8% increase in electrical goods and a 7.2% jump in motor vehicle parts. Despite the positive quarter-on-quarter growth, the economy was still 0.5% lower than the same period last year, with telecommunications and education the only sectors experiencing declines.

Cautiously optimistic, Reserve Bank Governor Anna Breman noted that monetary policy will continue to depend on incoming data, as financial conditions have tightened beyond earlier projections. While positive GDP numbers support current low rates, the services sector—comprising two-thirds of GDP—has contracted for 21 consecutive months, suggesting the recovery may remain uneven.

Money

US economy grows 4.3% in Q3, exceeding forecasts

US economy grows 4.3% in Q3 2025, surpassing forecasts despite inflation and shutdown challenges

Published

1 day ago

December 24, 2025

Harvey Vargas

US economy grows 4.3% in Q3 2025, surpassing forecasts despite inflation and shutdown challenges

In Short:
– The US economy grew by 4.3 percent in Q3 2025, exceeding forecasts and showing consumer resilience.
– Consumer spending rose by 3.5 percent, with increases in healthcare and recreational goods driving growth.

The US economy grew at a robust annual rate of 4.3% in Q3 2025, exceeding forecasts and marking its strongest quarterly expansion in two years. This growth comes despite lingering inflation concerns and political instability, showing that American consumers are continuing to spend and drive economic momentum.

Consumer spending, which accounts for roughly 70% of the economy, jumped 3.5% in the quarter, up from 2.5% previously. Much of this increase was fueled by healthcare expenditures, including hospital and outpatient services, along with purchases of recreational goods and vehicles. Exports surged 8.8%, while imports fell 4.7%, giving net economic activity a boost, and government spending bounced back 2.2% after a slight decline in Q2.

Remains optimistic

Despite the strong growth, inflation remains in focus. The personal consumption expenditures (PCE) price index rose 2.8%, up from 2.1%, with core PCE also climbing. Economists are closely watching the job market and tariff-related pressures. Meanwhile, the recent federal “Schumer shutdown” is expected to slow Q4 growth, potentially trimming GDP by 1 to 2 percentage points. Treasury Secretary Scott Bessent, however, remains optimistic that 2025 will still reach a 3% growth rate.

The Q3 numbers are also influencing expectations for the Federal Reserve. Analysts now see an 85% probability that interest rates will remain stable at the January 2026 meeting. Steady rates could provide a measure of certainty for investors, businesses, and consumers alike as they make decisions heading into 2026. Overall, the data paints a picture of a resilient US economy navigating both challenges and opportunities.

Money

Laurene Powell Jobs exits Monumental Sports ownership completely

Laurene Powell Jobs sells her stake in Monumental Sports & Entertainment to Arctos Partners and QIA for $7.2 billion

Published

1 day ago

December 24, 2025

Harvey Vargas

Laurene Powell Jobs sells her stake in Monumental Sports & Entertainment to Arctos Partners and QIA for $7.2 billion

In Short:
– Laurene Powell Jobs sold her stake in Monumental Sports & Entertainment to Arctos Partners and Qatar Investment Authority.
– The deal values the enterprise at £7.2 billion, ending her eight-year involvement.

Billionaire Laurene Powell Jobs has officially exited Monumental Sports & Entertainment, selling her entire stake to private equity firm Arctos Partners and the Qatar Investment Authority. The transaction values the company at $7.2 billion, ending Powell Jobs’s eight-year involvement that began in 2017.

Monumental Sports owns the NBA’s Washington Wizards, NHL’s Washington Capitals, WNBA’s Washington Mystics, Capital One Arena, and Monumental Sports Network. Arctos Partners joins as a new minority investor, while QIA increases its ownership, further solidifying its presence in U.S. sports. Ted Leonsis, founder and CEO, emphasized plans to expand the Washington, D.C. sports ecosystem and enhance fan experiences.

This deal highlights the growing influence of private equity and sovereign wealth funds in sports. Arctos Partners now holds stakes in over 25 teams, including several NBA franchises, while QIA becomes the first sovereign wealth fund to invest directly in a major U.S. sports team, leveraging NBA regulation changes.