Macquarie Infrastructure Group Update

Submitted by Craig Strzelecki on 2 May, 2007 - 19:58

Macquarie Infrastructure Group (MIG) has a share price target of $4.32 from analyst Citigroup Investment Research. A Solid Third Quarter: MIG has reported a solid 3rd quarter result with 30 percent growth in proportionally consolidated EBITDA (on a like-for-like basis) to $164m – 7% higher than estimates from the analyst of $154m. With assets performing strongly, the company is on track to deliver on their FY07e EBITDA of $668m. MIG remains their No.1 pick in the sector with target price of $4.32ps – offering ETR of 19.4%. Drivers of Performance: A strong result was delivered by traffic ramp-up on Westlink M7 and excellent management of APRR. The on-going cost cutting at APRR is expected to deliver a superior EBITDA growth in the medium-term. Despite unfavourable weather conditions, 407ETR delivered a strong result boosted by recent lane widenings. Operating Leverage Evident: A 13% growth in revenue and a 6.5% reduction in expenses have resulted in expansion in EBITDA margin to 63%, from 55% in the pcp. With c8% pa growth in toll charges coming through from 74% of the portfolio (407 & M6 Toll), and GDP+ growth in volume, the analysts forecast 10% pa CAGR in EBITDA and margin to 65% by 2010. NAV Could Be $4.10ps in June: With pressure off interest rates and softening A$, MIG’s NAV could well rise to over $4.10ps by June 07 due to DCF roll forward, and de-risking of not only APRR, but also 407ETR and Westlink. A $540m of remaining share buy-back could easily be supplemented by another $500m – lifting the buy-back firepower to well over $1b. Performance Fees Unlikely In FY07e: Despite a major recovery in Macquarie Infrastructure Group's share price in the recent past (and a 2.4% out-performance of the benchmark index), historic under-performance by $2.7b means that MIG' share price has to trade above $4.64ps to generate fresh performance fees.

Macquarie Infrastructure Group Limited is listed on the Australian Stock Exchange (ASX) under stock code MIG. You can view their investor website here. MIG was listed on the ASX on 16 December, 1996. Stephen Allen is the CEO for Macquarie Infrastructure Group and Mark Johnson the Chairman. Macquarie Infrastructure Group (MIG) is one of the largest developers and operators of toll roads in the world. MIG has a geographically diversified portfolio of 11 toll roads across seven countries, and a track record of successfully integrating significant, complex businesses. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade MIG. Check your charts and good luck with your share trading!