Babcock & Brown (BNB) Share Trading Recommendation

Submitted by Craig Strzelecki on 19 February, 2007 - 09:05

Babcock & Brown (BNB) have a Buy 2 share trading recommendation and a price target of $28.50 from analyst UBS. BNB announced that it has extended its revolving syndicated corporate debt facility from $1.32b to $2.35b. Following its $300m capital raising in September, a high ROE and low payout, we expect Shareholder's funds to be c$1.9b at 31 Dec. This brings BNB's total investment capital or deal making capacity (SHF + Corp Debt) to $4.3b from $3.3b. This facility demonstrates BNB's strong deal pipeline & provides it with the flexibility to invest as opportunities arise. With growing staff & capital BNB's outlook appears strong. The analyst expect BNB to deliver FY06 NPAT of $382m (guidance is c$365m) and a final div of 19cps. Result should be driven by Infrast, Corp Finance & Op Leasing divisions. Given BNB's pipeline we expect a positive outlook statement. Following the result the 2nd tranche of exec shares shall be released from escrow (c55m shares). BNB stated any exec shares tendered will be sold via a "centralised process". Key drivers recognised by the analyst for the BNB share price: (1) expanding capital base (2) ongoing earnings-upgrade cycle (3) highly leveraged to its Funds rollout (4) seed assets on its bal sheet (5) diversified rev. Risks: (1) sentiment towards the model (2) volatile PE (2) int rate & mkts risks (3) transactional rev.

Babcock & Brown Limited is listed on the Australian Stock Exchange (ASX) under stock code BNB. You can view their investor website here. Babcock & Brown is involved in investment banking, structured finance advisory, arrangement and management businesses, principal investment and other wholesale financial services. BNB was listed on the ASX on 6 October, 2004. Phillip Green is the Managing Director of Babcock and Brown. Find out the meaning of the recommendations in this primer. More Babcock & Brown (BNB) shares recommendations and news. Browse for other stockbroker recommendations. Check your charts and good luck with your share trading!