Business Summary Qube Holdings Limited (QUB) is an integrated provider of import and export logistics services. Group is involved in the management, development and operation of strategic properties with future development potential into logistics facilities. QUB operates in three divisions covering Automotive, Bulk and General Stevedoring, Landside Logistics and Strategic Development Assets. Port & Bulk: The division comprises Qube's wholly owned operations, Qube Ports & Bulk, as well as Qube's associates Australian Amalgamated Terminals Pty Limited (50%), Northern Stevedoring Services Pty Ltd (50%) and Prixcar Services Pty Ltd (25%). The division's port activities involve the provision of a range of services for passenger, agricultural and mining vehicles. Services include stevedoring of the vehicles from the vessels, storage of the vehicles, processing, inspection and delivery to the end customer. Qube's bulk activities are aimed at offering customers a comprehensive logistics solution from mine to port to ship covering activities including transport, stockpile management, warehousing, bulk out-loading and stevedoring. Logistics: The division comprises Qube's wholly owned operations, Qube Logistics, as well as an associate of Qube Logistics, Mackenzie Hillebrand (50%). The primary focus of Qube Logistics is to provide a range of services relating to the import and export of containerised cargo. Strategic Assets: The division comprises Qube's interest in the Moorebank Industrial Property Trust (MIPT) (66.7%), a strategically located property at Minto in Sydney's south west (100%) and Qube's 39.9% interest in the Quattro Grain joint venture and a 50% shareholding in TQ Holdings Pty Limited, a joint venture with Japanese petroleum group JXTG Group. The Quattro Grain joint venture has started construction of new grain storage and handling facility at Port Kembla in New South Wales. Acquisition Qube successfully completed the acquisition of Aurizons minority interest in MIPT (33%), a 50% interest in Patrick Terminals and the remaining 50% interest in Australian Amalgamated Terminals (AAT) In December 2016. Latest Research Balance Sheet Optionality to Help Navigate A Weaker Outlook Upgrade to Buy/High Risk TP: $2.75 — We upgrade our recommendation on Qube Holdings from Sell to Buy/High Risk with a $2.75 price target ($2.80). Our EPS forecasts decline ~4% in FY20e; ~22% in FY21e and ~20% in FY22e due to a higher share count and lower expected volume growth for Qube’s Operating Division. We think the de-risked balance sheet (gearing at ~28%), path for value realization around Moorebank and sale of non-core property assets (Minto), scope for strategic accretive acquisitions and cost controls will generate value for shareholders. We forecast a 3-year EPS CAGR of ~12% to FY22e, which will rely on further uptake at Moorebank. For more information see research 4 May 2020. GICS - Transportation Qube Holdings Limited ASX Code: QUB Price: $2.86 12 Mth Target Price: $2.71 Rating: Buy - High Important Disclaimer - This may affect your legal rights: Because this document has been prepared without consideration of any specific client's financial situation, particular needs and investment objectives, a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the proper authority of such licensee, who has provided you with this report by arrangement with Bell Potter Securities Limited) should be consulted before any investment decision is made. While this document is based on the information from sources which are considered reliable, Bell Potter Securities Limited, its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information contained in this document is complete or accurate. 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Shares on issue 12 Month High 12 Month Low 11 June 2020 $5,387m 1,883.5m $3.57 $1.67 Rating Rating 12 Mth Target Price Capital Gain Gross Yield Implied Total Return Buy - High Risk $2.71 -5.2% 2.5% -2.8% Investment Fundamentals FYE 30 Jun 2019A 2020F 2021F 2022F Profit $m 101.0 106.0 130.0 164.0 Profit (norm)* $m 101.0 106.0 130.0 164.0 EPS* ¢ 6.0 6.0 7.0 9.0 EPS Growth % 0.0 0.0 16.7 28.6 P/E* x 47.7 47.7 40.9 31.8 P/E Relative % 0.0 0.0 0.0 0.0 DPS ¢ 7.0 6.0 5.0 7.0 Yield % 2.4 2.1 1.7 2.4 Franking % 100.0 100.0 100.0 100.0 * Adjusted for goodwill and unusual items Source: Based on Citi estimates Share Price Chart Total Return on $10,000 Investment