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Patrick Corp and Toll Holdings shares climbed higher yesterday, as the market continued to digest the benefits of the Federal Government's biggest rail funding splurge since World War II.
Toll shares hit an all-time high of $10.87, before closing 17c higher at $10.81, while Patrick rose 19c or 3.8 per cent to $5.15, following the launch of the five-year $9.2 billion AusLink road and rail spending package on Monday.
With much of the package's $512 million in new rail funding, principally aimed at getting more of the nation's freight onto rail, the Patrick and Toll-owned Freight Australia was seen as the major beneficiary.
Macquarie Equities noted that 93 per cent of the AusLink rail package - mainly along the eastern seaboard - is being spent where Patrick and Toll's Pacific National operates.
Goldman Sachs JBWere said AusLink would help "underpin" the growth of Pacific National for the next five to seven years.
Yet Goldman said the AusLink funding still fell short "of the capital investment required to effect substantial long-term modal shift [the move from road to rail] in the east coast corridor".
Aside from the prospect of Australia's cumbersome rail system being improved, Patrick and Toll's non-rail operations were seen as major beneficiaries too.
Given both companies have large port operations, the $110 million in funding rail links into the Port of Melbourne and $110 million for Sydney are seen as a major boon.
Once the improvement have been made, trains carrying freight containers unloaded from ships at Patrick's docks in Melbourne will no longer hold up road traffic.
After stating his preparedness to inject $500 million on rail infrastructure in February if the Federal Government boosted spending, Patrick managing director Chris Corrigan is yet to announce any new funding.
Toll chief executive Paul Little, however, said his company would spend more on rail as long as there was a decent return on investment.
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