Toll Holdings (TOL) Shares Update

Submitted by Craig Strzelecki on 22 January, 2007 - 08:22

Toll Holdings (TOL) have a possible trading range between $18.40 to $23 and a valuation of $17.30 under the current ownership structure from shares analyst UBS. The analyst has carried out a detailed analysis of potential valuation scenarios for the three constituent parts of Toll assuming its demerger proposal proceeds: Toll Infrastructure, Toll Transport, and 62% stake in Virgin Blue. They arrived at a low case valuation of A$18.40, a mid case of A$20.70, and a high case of A$23.00. Assuming 13.6x EBITDA for Toll Infrastructure, they believe it will look attractive against the infrastructure and utilities sector on the basis of an estimated 6.0% yield, 12% growth, and 2.5-3.0x interest cover. Their mid case also assumes Toll transport (ex-Virgin) trades on the All Industrials average P/E, which would put it at a 12% premium to global peers. The analysts are taking up our normalised EPS forecasts by 5% in FY07 and 3% in FY08 to take account of changes to our Virgin Blue forecasts, and after reviewing Pacific National's FY06 statutory accounts that have been lodged with ASIC (discussed in this report). They are also introducing a pre-goodwill 1H net profit forecast of A$274m, which will be up 34% on pcp. As a result of the analysts earnings changes, their sum of the parts valuation (without taking account of the proposed demerger) rises from A$16.60 to A$17.30. TOL was a Winner of the Week in May 2006.

Toll Holdings Limited is listed on the Australian Stock Exchange (ASX) under stock code TOL. You can view their investor website here. TOL was listed on the ASX on 12 October, 1993. Toll Holdings is involved in local freight distribution; Interstate freight forwarding by road, rail and sea; Container packing and unpacking; Warehousing, storage and distribution; Stevedoring; Ports services; Shipping; Rail services. John Moule is the Chairman of Toll and Paul Little the CEO. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade . Check your charts and good luck with your share trading!

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