Pacific National Holdings Pty Ltd

Overview Key strengths Key risks Robust position in Australian thermal and metallurgical coal, bulk, and intermodal rail-haulage. Exposure to volume risk, which is partially offset by take-or-pay contracts in the coal segment. Moderate to high entry barriers and significant proportion of take-or-pay contracts for coal, providing a degree of cash flow certainty. Ability of management to continue to execute and fully retain business improvement benefits. Disciplined capital management, including suspension of dividends until Q4 fiscal 2023, to support metrics. Significant step up in debt-funded capital expenditure program from fiscal 2024 necessary to realize growth opportunities. We anticipate PN will maintain its strong position in its coal, intermodal and bulk haulage segments, supporting its business risk profile. This includes its market

...Pacific National Holdings Pty Ltd.'s (PN) strong competitive position in its core markets and stable business to persist near term despite adverse weather impacts. We anticipate PN will maintain its strong position in its coal, intermodal and bulk haulage segments, supporting its business risk profile. This includes its market share of nearly 42% in New South Wales' (NSW) coal haulage volumes and about 24% in Queensland's coal haulage volumes. The majority of PN's coal contracts are on a take-or-pay basis, providing additional visibility over revenues. Intermodal volumes deteriorated in fiscal 2022 by about 15% due to flooding events in the second half of fiscal 2022 and the impacts of COVID-19 on the company's workforce. That said, we anticipate intermodal volumes will recover over fiscal 2023 as operating conditions normalize, and thereafter grow as volumes transition from road to rail, particularly over longer routes. That said, the business has an inherent risk of lower contract prices...

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