Macquarie Infrastructure Group (MIG) Analysis

Submitted by Craig Strzelecki on 9 July, 2007 - 08:49

Macquarie Infrastructure Group (MIG) has a Buy 1 share recommendation and a $4 price target from Australian analyst UBS. 4Q07 traffic is generally in-line with expectations across the portfolio: Roadworks continue to negatively impact US road traffic in particular (we expect roadworks to be an ongoing theme for the next ~12 months). Revenue growth across the portfolio continues to be strong and generally in-line with expectations. 4Q07 traffic & revenue data detail: 407 (35% NAV) traffic +5.3% (benefit from new lane expansion). M6 (28% NAV) traffic +3.2%, rev +19.4% (+ve & -ve impact from roadworks). WestLink M7 (7% NAV) traffic +16.8%, rev +20.7% (revenue in-line but still missing short trips). Dulles (7% NAV) traffic -1.3%, rev -1.8% (still disappointing). Skyway (6% NAV) traffic +1.4%, rev -3.2% (-ve impact from roadworks). ITR (6% NAV) traffic flat, rev +53.1% (change in traffic mix from higher truck toll). Macquarie Infrastructure Group is now ~$683m through buyback facility (~$317m remaining): Buy-back started again on 4 Jul 07 after a 2 week absence during the performance fee pricing period. Approval for the buyback expires on 23 Aug 07, however MIG may apply for an extension & we expect ASIC to finalise rules for trusts going forward in ~3 months (ie no approval required and may buy-back above NTA). The analysts' $4 share price target for Macquarie Infrastructure Group (MIG) is $4.00, which is their 12-month DCF and estimate of the price MIG can buy back stock. They believe MIG represents a good buying opportunity at current levels. Potential positive catalysts include: 1) 407 ETR refi (we estimate could be in the region of ~A$700m); 2) Potential sale of APRR stake (and positive read-through/impact for MIG NTA); 3) Continuation of buyback & possible extension.

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!

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