What Happened to Asciano’s Share Price?
The share price of freight logistics company Asciano Ltd [ASX:AIO] rose by nearly 4% today as the Australian stock market grappled with the impact of conflict in Ukraine. Asciano shares have enjoyed a great month and are now close to hitting a five-year high.
Why Did This Happen to Asicano Share Price?
Reports have emerged over the past few days that Asciano is considering selling a stake in its Patrick Terminals & Logistics business. Patrick runs international container terminals in Melbourne, Sydney, Perth and Brisbane.
The potential buyer would be China Merchants, a state-owned Chinese conglomerate.
China Merchants owns stakes in several ports and seems attracted to Patrick’s solid earnings profile. Patrick earned Asciano $198 million before interest, tax, depreciation and amortization in the year ending 30 June 2013.
This morning, Asciano confirmed that it had been in discussions relating to a sale of a non-controlling interest in Patrick.
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The market’s betting a deal will favour Asciano. That’s why the shares have rallied today.
What Now For Asciano Ltd?
Asciano has already started taking costs out of its business, so any improvement in operation conditions should see plenty of revenue fall to the bottom line. If the company can sell a stake in Patrick at a good price, investors might look forward to increased dividend payouts.
Right now Asciano looks like a solid bet on the strength of the Australian economy.
Cheers, Tim Dohrmann+
Small-Cap Analyst, Australian Small-Cap Investigator
Join Money Morning on Google+
The post Why the Asciano Share Price Ascended Today appeared first on Stock Market News, Finance and Investments | Money Morning Australia.
