It seems logical that a transport company like Toll Holdings Ltd. would see a big boost to its bottom line from the oil-price plunge. Investors appear to think so. In the last six months, Toll shares have risen around 12% on the Australian Securities Exchange, compared with a 3% decline for the S&P/ASX 200. Meanwhile, oil has dropped nearly 60%.

To be certain, Toll, a leader in the Australian logistics business, will benefit from oil’s swoon—and the corresponding drop in fuel prices—but there’s more to this story than meets the eye.

Great Buy for Value, Income

Toll (ASX: TOL, OTC: THKUF, ADR: THKUY), a new addition to our AE Aggressive Portfolio, is Australia’s largest provider of transport and logistics services. The company stretches into every corner of the shipping business, delivering freight and operating parcel and courier services. It also owns warehouses and provides supply chain and distribution network support.

It’s a high-quality business with a dominant position in an industry that quite literally drives Australia’s economy. And despite its recent rally, the stock trades below our long-standing buy-under target of USD6, and it’s priced at just 15.16 times Toll’s fiscal 2014 earnings and 14.64 times its estimated fiscal 2015 earnings.

What’s more, the stock has a 4.7% yield, 2.2% better than the average for Australia’s main benchmark.

Look for these factors to grab investor attention and drive the stock’s performance on the ASX in 2015. And, yes, the company will benefit from cheaper fuel—eventually.

Shipping Volumes Key to Fuel Benefits

Here’s something many investors don’t know about the logistics industry: fuel prices don’t affect it very much because operators apply surcharges that vary—up or down—as part of the deals they sign with customers.

In other words, Toll shields itself from fluctuating fuel prices by passing these costs on to its clients. As a result, management doesn’t expect crude’s latest plunge to have any effect on the company’s bottom line.

But that doesn’t mean there’s nothing in it for Toll. The benefits will hinge on its major customers, such as Wesfarmers Ltd.’s (ASX: WES, OTC: WFAFF) Coles grocery unit and Woolworths Ltd. (ASX: WOW, OTC: WOLWF), the other main supermarket Down Under.

If fuel prices remain low over the medium to long term—and it looks as if they will—these and other large retailers will likely see Toll and other shippers pass on their savings from cheaper gas. In turn, retailers would hand at least some of these savings off to customers, encouraging them to buy more, benefiting Toll’s shipping volumes.

In the longer run, the payoff for both Toll and the retailers lies in the rise in consumer sentiment springing from lower pump prices. That would also boost discretionary spending, and of course Toll’s exposure to the retail sector would continue to be a big plus.

In addition to Wesfarmers and Woolworths, department-store operators and Toll clients David Jones and Myer Holdings are positioned for higher profits as consumers buy more non-essential items with their fuel savings.

And there’s still the possibility of more direct savings for the shipping giant: Although clauses in its major contracts may keep it from pocketing a windfall from the falling oil price, it could reap gains on smaller deals with less rigid fuel-cost terms.

These potential gains come at a good time for Toll. Last year, its Australian businesses felt pressure from the weaker mining sector and flat volumes in the retail industry. But the company used this time to upgrade its logistics facilities, so it can take full advantage when conditions improve.

Asset Sales Unlock Value

Meanwhile, management is taking steps to improve Toll’s profitability by exiting money-losing businesses.

As part of this plan, it recently began reversing its aggressive expansion into Asia, announcing the sale of its 40% interest in the BIC India trucking business, its 50% stake in the Toll Dnata Airport Services joint venture, its 55% share in the Toll Railway concession in Cambodia and Toll Global Express Asia.

The company will also exit Toll Marine Logistics Asia and will look to sell the land that its Singapore-based Toll Offshore Petroleum Services oil and gas depot occupies.

These deals should result in cash proceeds of more than AUD100 million when they close by June 30, giving Toll’s fiscal 2015 earnings a lift and letting the company put these funds to better use.

In addition, management expects ongoing restructuring and efficiency improvements to drive AUD50 million in savings this year, after shaving AUD100 million off costs in fiscal 2014. Toll also forecast higher earnings compared with fiscal 2014, despite difficult business conditions.

Eyeing Growing Markets

In its 2014 fiscal year, which ended June 30, 2014, the company posted a net profit of AUD286.1 million, up from AUD84.5 million for fiscal 2013. Revenue rose 1.1% to AUD8.81 billion.

Management declared a final dividend of AUD0.15, up from AUD0.145 a year ago. The full-year payout of AUD0.28 was up 3.7% compared with fiscal 2013.

The company’s recent contract wins—particularly in the fast-growing business-to-consumer parcel-delivery market—will help boost its earnings this year. Toll is also considering opportunities in other large, growing markets, such as pharmaceuticals and agriculture, where it’s currently a small player.

Toll Holdings is a buy under USD6 on the ASX using the symbol TOL and on the U.S. over-the-counter (OTC) market using the symbol THKUF.

Toll Holdings also trades on the U.S. OTC market as an American depositary receipt (ADR) under the symbol THKUY. Toll Holdings’ ADR, which is worth two ordinary ASX-listed shares, is a buy under USD12.