Sydney Roads Group (SRG) Shares Tip

Sydney Roads Group (SRG) have a Buy 1 shares recommendation and a share price target of $1.28 from stock analyst UBS. There could be a potential bid for SRG by TCL and both companies in trading halts pending material statements. UBS values SRG at $1.28 (based on 12-month DCF) and UBS estimates that TCL could extract about $10-15m pa in synergies (10-15c /per SRG security). TCL could pay up to $1.38 for SRG (assuming $250m debt + ~$10m pa synergies) resulting in accretion of ~35% to OpCF (FY07e 32cps) and about 1% to FY 07E DPS (54cps). The reasons that the analyst sees why TCL may bid are: (1) SRG's mature portfolio provides higher OpCF coverage for TCL. OpCF coverage would move to about 80% (from about 60%). (2) Better Sydney footprint with more exposure to LCT opening. (3) Strong position to drive tolling back office consolidation. However it isn'all blue skies, there are risks that the analyst foresees in any takeover move: (1) TCL may not have full control of the 3 roads (given minorities) and find it difficult to extract synergies. We believe TCL would be in a position to extract the most synergies from SRG; (2) Competing bid from CKI & Industry Funds Management, who we regard as potential interested parties; (3) Bid may be a distraction from US strategy. A previous stock recommendation for Sydney Roads Group (SRG).

Sydney Roads Group Limited is listed on the Australian Stock Exchange (ASX) under stock code SRG. You can view their investor website here. SRG was listed on the ASX on 31 July, 2006. Find out the meaning of the recommendations in this primer. Sydney Roads Group owns and operates Sydney motorways. Robert Morris is the Chairman for SRG and Edward Sandrejko the CEO. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade . Check your charts and good luck with your share trading!