QR National

By Dan Stratful

Friday 20th January 2012

QR National’s (ASX: QRN) shares have performed well since its IPO, greatly outperforming the ASX 100 index. QRN is the largest rail freight haulage business in Australia by tonnes hauled, transporting 260 million tonnes of coal and freight a year.

QRN’s activities focus primarily on the transportation of coal, iron ore, other minerals, agricultural products, and general/containerised freight. QRN is the largest transporter of coal in Australia and the world's largest rail transporter of coal from mine to port.

In November 2010, Queensland State sold shares of QRN in an IPO at $2.55 each.

The Queensland government retains a 34% stake in the business and there has been a smooth transition from government ownership to an ASX listed
Entity. QRN’s primary focus is now one of commercial returns.

With 85% of its revenue derived from the Australian resources industry QRN appears well placed to benefit from a continued mining boom in Australia. Both growing coal and iron ore exports are expected to be a key driver of future growth.

QRN is an example of how governments sell down state owned enterprises (SOE’s), and is an example of what may be to come for NZ investors in mid/late 2012 who are awaiting the sell down of NZ government SOE’s.

Analysts’ expect QRN’s earnings per share (EPS) will be around 15c for the year ending 30 June 2012 (FY12) which leaves QRN trading on a forward PE ratio of 24.8. That’s no bargain, even if more growth is expected in FY13 with analysts’ expecting EPS of around 19c in FY13 providing a PE ratio of 19.6.

QRN’s business trading will be underpinned by the mining boom but the shares are edging on over-priced for now.

Status: REDUCE

QRN’s shares today traded at $3.72

For sharemarket and fixed income trading enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232, dan.stratful@irg.co.nz
**A disclosure statement is available, on request and free of charge.

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