Fund Manager Summary on Aurizon Holdings Ltd (ASX:AZJ)
In December 2025, Wentworth Williamson commented that Aurizon remains materially undervalued and that management initiatives to unlock value through potential asset sales should result in surplus capital being returned to shareholders. Aurizon Holdings Ltd (ASX:AZJ) draws a broadly cautious but constructive consensus from fund managers: most highlight the structural strength and cash generation of its regulated Network and Coal franchises (high-barrier rail infrastructure with pricing/regulatory protection and a heavy metallurgical coal mix) and view recent commercial wins such as the BHP Olympic Dam haulage contract, cost-saving programs (including a cited $50m initiative) and ongoing buybacks (about $300m completed in FY25 plus a further $150m program) as credible catalysts, while risks center on the underperformance and integration challenges of the Bulks business since the OneRail acquisition (acq. ~$1.4b), elevated growth capex through FY23–25, FY25 doubtful-debt provisions and under-recovered network revenues, and divergence among investors on strategy and governance (some calling for asset sales or management/board change); actionable considerations are to monitor the Network strategic review outcome, Bulks contract ramp-up and utilisation, capex normalization, cost-savings delivery, dividend and buyback execution (recent guidance referenced dividend yield >6% and FY26 EBITDA guidance of $1.68–1.75bn and dividend guidance of 19–20c), and any announced capital returns or structural transactions that could unlock valuation.
Commentary From The Managers
There are 15 insights from 8 fund managers regarding their investment in Aurizon Holdings Ltd (ASX:AZJ) available on Thesis Tracker.
Unlock Updates With ThesisTracker Pro
Don’t let information asymmetry undermine your investment returns. Join other engaged investors on ThesisTracker Pro.
Updates are made available to members within 12 hours of being released. The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Wentworth Williamson
31 Dec 2025
$3.65
Summary
- Wentworth Williamson believes Aurizon remains materially undervalued by the market and continues to hold because the bulk of its asset base is in regulated and contracted rail infrastructure and rolling stock, asset classes that should command premium valuations.
- Wentworth Williamson views Aurizon’s asset mix — predominantly regulated and contracted assets — as offering stable, long‑duration cash flows and scarcity value relative to many peers.
- Wentworth Williamson notes a clear valuation gap: these asset classes typically attract premium valuations in offshore markets, yet Aurizon trades on a materially lower multiple.
- Wentworth Williamson is encouraged by management initiatives aimed at unlocking value, particularly the prospect of targeted asset sales.
- Should such transactions proceed, Wentworth Williamson’s clear preference is for any surplus capital to be returned to shareholders, and he will advocate strongly for that outcome.
- Until value is demonstrably realized and capital allocation outcomes are confirmed, Wentworth Williamson continues to hold Aurizon on the expectation these developments can materially close the valuation gap.
L1 Capital
31 Oct 2025
$3.43
Summary
- Aurizon (Long +8%) shares showed strength during the month.
- Limited company-specific news flow, but Aurizon reaffirmed its earnings guidance at its AGM.
- Execution of a $150m buyback program announced in August continues.
- Commodity network volumes indicate a robust start to FY26, with strong NSW and Queensland coal and WA grain volumes.
- Share price supported by a broker upgrade highlighting potential upside in the Network business.
- Australia’s rare earths deal with the U.S. may enhance medium- and long-term opportunities for the Bulks business.
- L1 Capital continues to see Aurizon as materially undervalued.
- The regulated Network business constitutes over half of the company’s value and is under-appreciated by the market.
- A strategic review announced in February includes a review of the Network ownership structure, with outcomes expected at H1 26 results.
- The Coal haulage business remains a significant cash generator for the group.
- Expectations of improving cash generation from the Bulks business, supported by growth opportunities and a tighter approach to capex.
- With strong cash flows, L1 Capital anticipates continued solid returns to shareholders through dividends and share buybacks.
Endeavor Asset Management
31 Oct 2025
$3.43
Summary
- Aurizon (AZJ) is one of the portfolio’s largest positions for Endeavor Asset Management.
- Endeavor Asset Management continues to hold due to FY26 EBITDA guidance reaffirmed at $1.68-1.75 billion.
- Dividend guidance introduced at 19-20 cents per share, equating to a 6.5% yield on the cost base.
- Higher thermal coal prices remain supportive of the investment thesis.
- While bulk freight growth has been slower than expected, it continues to diversify earnings.
- This diversification is seen as a factor that strengthens the company’s long-term outlook.
L1 Capital
16 Oct 2025
$3.33
Summary
- L1 Capital continues to hold Aurizon due to its portfolio of irreplaceable assets.
- Aurizon shares delivered a total return of 7% in the September quarter, including a 6.5 cent per share final dividend.
- Despite downgrading guidance, this was attributed to non-recurring items such as bad debt write-downs and under-recovery in network revenues.
- Underlying EBITDA was slightly ahead of analysts' expectations, which were overly pessimistic.
- Aurizon secured a landmark contract for its Volks division, enhancing its competitive positioning in the BHP Olympic Dam operations.
- After completing buybacks totalling 300 million during FY25, a new buyback program of 150 million was announced.
- L1 Capital has increased its holding in Aurizon, becoming the company’s largest shareholder.
- Aurizon is considered materially undervalued by the market, particularly its regulated networks business.
- Discussions around a new agreement with miners are progressing, which will enhance earnings certainty.
- While the coal haulage business is strong, the bulks business is expected to improve cash generation and growth opportunities.
- With strong cash flows, Aurizon is expected to deliver continued solid returns to shareholders through dividends and buybacks.
L1 Capital
30 Sept 2025
$3.19
Summary
- Aurizon Holdings Ltd. is Australia's largest rail freight operator, with a focus on unlocking intrinsic asset value.
- Operates across four key segments: Network, Coal, Bulks, and Containerised Freight.
- Network segment includes over 5,100 km of rail track, significantly contributing to earnings, especially through the Central Queensland Coal Network.
- Coal segment is stable with strong cash flows from long-term haulage contracts.
- Bulks segment has underperformed post-OneRail acquisition, but L1 Capital sees potential upside with new contracts and operational improvements.
- Containerised Freight is in early development, with expectations for improved financials as operations scale.
- Five key drivers for share price increase: under-appreciated network assets, stable coal earnings, upside potential in Bulks and Containerised Freight, reduction in growth capex, and increasing shareholder returns.
- Growth capex is expected to decline after FY26, allowing for profitable growth and improved cash flows.
- Aurizon has initiated share buybacks, indicating confidence in future cash flow generation.
- L1 Capital remains optimistic about Aurizon's long-term outlook despite recent challenges, believing the current share price does not reflect future cash flows and growth potential.
Aitken Mount Capital Partners
10 Aug 2025
$3.25
Summary
- Aitken Mount Capital Partners believes Aurizon's strategy is misaligned, advocating for the sale of its bulk business.
- Angus Aitken criticizes Aurizon's focus on bulk, noting it is their smallest business and has not delivered financial outcomes.
- Aitken suggests that selling the bulk division, even at a loss, could lead to a potential doubling of the stock value and increased dividends.
- Aitken is actively seeking a family office or billionaire investor to acquire a significant stake in Aurizon to influence management decisions.
- He emphasizes that returning capital to shareholders instead of pursuing acquisitions like One Rail could have significantly increased dividends.
- Aitken calls for a major overhaul of Aurizon's board, including the replacement of CEO Harding.
L1 Capital
31 July 2025
$3.24
Summary
- Aurizon (Long +7%) shares showed strength following a trading update and a significant contract win in the Bulks segment.
- The trading update included a modest downgrade to company guidance due to non-recurring items such as bad debt write-downs and underrecovery in Network revenues.
- Despite these challenges, pre-released underlying EBITDA was slightly above analyst expectations, indicating an overly bearish outlook.
- Aurizon secured a large contract win for its Bulks division to become the rail-hauler for BHP’s Olympic Dam operations, effective October.
- This contract is a long-term growth opportunity with a high-quality counterparty, enhancing Aurizon’s competitive positioning.
- Aurizon conducted a site visit to its strategic assets, including the Gilman rail terminal and Dry Creek maintenance facilities, which have potential for increased utilization.
- L1 Capital views Aurizon as materially undervalued, particularly its regulated Network business, which represents over half of the company's value.
- The company announced a strategic review in February regarding the Network ownership structure, with results expected by year-end.
- The Coal haulage business is a substantial cash generator for the Group, while the Bulks business is expected to improve cash generation going forward.
- With strong cash flows, L1 Capital anticipates solid returns to shareholders through dividends and share buybacks.
Endeavor Asset Management
31 July 2025
$3.24
Summary
- Endeavor Asset Management re-entered Aurizon Holdings (AZJ) in July due to its stable infrastructure-like earnings profile.
- Expectation of a valuation re-rate as the company transitions from thermal coal to higher bulk earnings.
- Aurizon is currently trading on 12.50x P/E and offers a greater than 6.0% dividend yield, providing good compensation for holding this strategic asset.
- The transition has faced challenges, but Endeavor is confident the company has turned a corner.
- Winning the BHP Copper haulage contract in South Australia is seen as a crucial step for the Bulk business.
- Consolidation of Bulk and Containerised Freight segments is expected to yield operational benefits.
- Endeavor anticipates FY25 results to mark a low in the earnings cycle for AZJ, with expected YoY upward revisions thereafter.
- The business has significant capacity to expand within its existing infrastructure footprint.
- Growth potential from new volumes in the Bulk Central region, particularly in light of BHP's long-term expansion ambitions.
- Key catalysts for future earnings growth include cost reduction initiatives, normalization of coal volumes, and further bulk contract wins.
L1 Capital
3 July 2025
$3.14
Summary
- Aurizon owns irreplaceable regulated rail infrastructure connecting Queensland coal mines to ports.
- L1 Capital views this as a high-barrier, cash-generative asset with regulatory protection and pricing certainty.
- Approximately 70% of volume is metallurgical coal, which supports steelmaking.
- L1 welcomed Aurizon’s strategic review of its network business, believing the market undervalues its core infrastructure.
- Operational improvements include a $50 million cost-saving initiative.
- A new contract with BHP at Olympic Dam is seen as a strategic win that embeds Aurizon into BHP’s growth pipeline.
- This deal could pave the way for broader bulk-haulage opportunities.
Equity Trustees Asset Management
30 June 2025
$3.03
Summary
- Aurizon has invested heavily in developing its non-coal Bulks business.
- Insufficient contract wins have not justified the capital expenditure in terms of returns.
- While long-term success may be possible, an imminent improvement is not expected.
- This lack of expected growth prompted Equity Trustees Asset Management to reassess their investment.
- Funds are believed to be better allocated to other opportunities.
Oracle Advisory Group
31 Mar 2025
$3.10
Summary
- Aurizon (AZJ) has served as a decent interest rate hedge for the portfolio.
- The company has been an underperformer in recent years.
- Oracle Advisory Group identified better investment opportunities during the market correction.
- As a result, they sold out of their position in Aurizon.
Endeavor Asset Management
31 July 2024
$3.72
Summary
- Endeavor Asset Management re-entered an investment in Aurizon Holdings (AZJ), having successfully owned it on-and-off previously.
- Expectations for FY24 results are optimistic, with forecasts suggesting performance better than anticipated.
- Gearing levels are expected to improve, surpassing the company's target.
- This improvement is projected to enable increased capital returns to shareholders through buybacks and partially-franked dividends.
- Endeavor Asset Management believes the market will positively respond to these developments.
- Current valuations provide downside protection, with potential to monetize and sell portions of its assets.
- The fund manager anticipates that stable regulated assets could achieve a higher multiple than AZJ's current trading metrics.
- Current metrics include a sub-7x FY25 EBITDA and a 6.6% yield.
L1 Capital
31 Dec 2023
$3.82
Summary
- Aurizon is the leading rail operator in Australia with over 5,000km of network rail assets.
- Holds the largest haulage operations in Australia across coal, bulk commodities, and containerised freight.
- L1 Capital identifies three key drivers for the company’s earnings outlook:
- Regulatory network earnings expected to increase as it enters a new regulatory period.
- Volume growth from contract wins and reduced weather impacts.
- Focus on operational efficiencies to enhance performance.
- This earnings growth, along with a reduction in capital expenditure and improvement in payout ratio, is expected to drive steady increases in dividends.
Cooper Investors
30 June 2023
$3.92
Summary
- Cooper Investors built a position in Aurizon (AZJ) during the quarter.
- The investment is supported by improving operating trends and attractive valuation.
- Regulated earnings (below rail coal) are expected to see strong near-term growth due to higher interest rates.
- Unregulated earnings (above rail coal and bulk) should rebound from higher volumes and better margins.
- Coal accounted for 86% of Aurizon's earnings in 1H23, presenting material near-term growth potential.
- Regulated returns for below rail business are largely known for FY24-27.
- Coal haulage volumes have been affected by above-average rainfall but are expected to improve with the El Niño event.
- Aurizon's investment in bulk aims to mitigate medium to long-term coal headwinds.
- Bulk contract returns are projected to be above the company’s cost of capital.
- Bulk is seen as a partial hedge for coal during the energy transition, given the demand for critical minerals.
Collins St Asset Management
31 Dec 2020
$3.90
Summary
- Collins St Asset Management identifies Aurizon Holdings Ltd as a potentially strong investment due to its simplicity and stability.
- Aurizon holds a monopoly position in Queensland freight, which underpins its earnings.
- The company showcases a highly stable earnings profile and an excellent return on equity.
- Management has been actively buying back shares at approximately 5% per annum.
- It offers an attractive dividend yield of almost 9% gross.
- Recent market sentiment towards coal-related businesses has created a buying opportunity for Aurizon.
- Coal haulage constitutes about 40% of earnings, with only half from thermal coal.
- 50% of earnings are generated from third-party access to its rail lines.
- The concerns surrounding the coal business are viewed as over-blown by Collins St Asset Management.
- A reduction in coal haulage could be offset by an increase in third-party access.
- At a price point of $3.70, the fundamentals indicate the company is undervalued, with a target price estimated at $6.50.
The completeness, accuracy or current status of the investments referenced are not guaranteed.
Frequently Asked Questions
Who is investing in Aurizon Holdings Ltd (ASX:AZJ)?
Fund managers including Collins St Asset Management, Cooper Investors, L1 Capital, Endeavor Asset Management, Oracle Advisory Group, Aitken Mount Capital Partners, Equity Trustees Asset Management and Wentworth Williamson have invested in Aurizon Holdings Ltd (ASX:AZJ).
Why do fund managers invest in Aurizon Holdings Ltd?
Fund managers invest in Aurizon Holdings Ltd due to its strategic assets and stable cash flows. The company operates essential rail infrastructure, particularly connecting Queensland coal mines to ports, with significant earnings from coal haulage. Despite underperformance in the Bulks segment, recent contract wins, such as with BHP, are expected to enhance long-term growth. Aurizon also offers an attractive dividend yield over 6%, appealing for income-focused investors, with potential for capital returns as operational improvements take effect.
What happened to Aurizon Holdings Ltd (ASX:AZJ)?
Fund managers are investing in Aurizon Holdings Ltd due to its undervalued assets and strong cash generation capabilities. The regulated Network segment is critical, providing over half of the company's value and expected to gain further visibility and earnings certainty through new agreements with miners. The Coal division offers stable returns from long-term contracts, while recent strategic initiatives in Bulks and Containerised Freight suggest future growth potential, despite past underperformance. Improved cash flows and ongoing dividend and share buyback programs indicate strong shareholder returns, affirming a positive outlook for the company's growth.
What is the short interest in Aurizon Holdings Ltd (ASX:AZJ)?
The short interest in Aurizon Holdings Ltd (ASX:AZJ) is 1.81% which makes it the 146th most shorted stock on the ASX. Of the 1.8B shares that Aurizon Holdings Ltd has on issue, 31.7M have been sold short.
What does Aurizon Holdings Ltd (ASX:AZJ) do?
Aurizon Holdings Ltd. is a rail freight operator, which engages in provision of customers with integrated freight and logistics solutions across an extensive national rail and road network, traversing Australia. It operates through the following segments: Network, Coal, Bulk, and Other. The Network segment manages the provision of access to, and operation of, the CQCN, provision of maintenance and renewal of Network assets. The Coal segment provides transport of coal from mines in Queensland and New South Wales to end customers and ports. The Bulk segment provides integrated supply chain services, including rail and road transportation, port services and material handling for a range of mining, metal, industrial and agricultural customers. The Other segment includes provision of services to internal and external customers. It moves bulk commodities such as iron ore, coal, cement, bauxite, alumina, base metals, grain, livestock and fertilizers. The company was founded on September 14, 2010 and is headquartered in Fortitude Valley, Australia.