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Aecon Consortium Takes Next Step Toward $10.5 Billion Toronto GO Rail Expansion

ONxpress Transportation Partners has been identified by Infrastructure Ontario (IO) and Metrolinx as the First Negotiations Proponent to design, build, operate and maintain the GO Rail Expansion.

Aecon Group (ARE – Toronto) announced Wednesday that its consortium has been named by Infrastructure Ontario (IO) and Metrolinx as the First Negotiations Proponent to design, build, operate and maintain the GO Rail Expansion – On-Corridor Works project in the Greater Toronto Area (GTA).

The C$13.5 billion (US$10.5 billion) project will electrify and transform Toronto's GO rail network into a system that will deliver two-way, all-day service.

ONxpress Transportation Partners is a consortium comprised of Canada's Aecon, Spain's FCC Construcción (FCC), Germany's Deutsche Bahn International Operations and France's Alstom.

Aecon holds a 50% per cent interest in a civil joint venture with FCC, which will handle the construction, and a 28% interest in a 25-year operations and maintenance partnership with Deutsche Bahn.

Infrastructure Ontario's procurement process

The identification of the "First Negotiations Proponent" is a critical step in Infrastrucure Ontario's process.

In layman's terms, the moniker means that Aecon's consortium scored the highest on the request for proposal (RFP) and is in the driver's seat for negotiations with Infrastructure Ontario.

Upon successful conclusion of the process, ONxpress Transportation Partners would proceed towards Commercial Close, which is expected in the coming months.

Development is expected to begin in Q2 of this year.

“We are pleased to bring our preeminent and multidisciplinary expertise to this transformational project that will significantly improve regional rapid transit service across the GTA, with increased frequency, faster trains, additional stations and seamless connections,” said Jean-Louis Servranckx, Aecon's President and CEO.

“This is one of the largest transportation investments in Canada and we are proud to work with Infrastructure Ontario, Metrolinx and our partners to deliver this world-class, sustainable project.”

Investment thesis

Aecon stock has fallen 20% from its September 2021 highs, which feels like an undue penalty for a company with:

  • The most recent step forward 
  • $4 billion in trailing 12-month revenue (through Sept. 30, 2021)
  • $261 million in trailing 12-month EBITDA
  • $6 billion in order backlog
  • 23% annual EPS growth over last five years
  • The key near term milestone to watch for is Aecon's Q4 and full year 2021 earnings announcement, scheduled for Tuesday, March 1, 2022, after the close of the market.


Source: Equities News

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