CF Asia Pacific FY18 and 1Q19 Update May 2019

Over FY18, CFAP’s results were negatively impacted by drought in most of the agricultural regions in Eastern Australia (see further below). As a result, operating revenues were down 8.8% on the prior period, falling from AUD64.6m in FY17 to AUD58.9m in F18. EBITDA for FY18 was AUD33.7m, down 11.6% from FY17. Notwithstanding the negative impact of lower locomotive demand, CFAP’s revenue diversification strategy was beneficial in supporting the group while the leasing business has been affected due to the drought. We maintain our recommendation on CFAP’s 8.35% notes due 2020.