Macquarie Infrastructure Group (MIG) Update

Submitted by Share Trading on 10 April, 2008 - 12:33

Macquarie Infrastructure Group (MIG) has a maintained Outperform recommendation and a $4.10 share price target from Australian sharemarket analyst Macquarie Research.

Macquarie Infrastructure Group (MIG): Traffic Figures

Macquarie Infrastructure Group (MIG) has underperformed the market quite considerably in the last year, in part due to its exposure to the U.S. domestic market. But since selling part of its interests in the U.S. this exposure is small. In today’s note Macquarie Research Equities (MRE) review MIGs traffic figures for March and the individual performance of some of their roads.

Strong performers for the previous month continue to be the 407 and the M7, with the 407 benefiting from a strong economy in Canada, lane widening and corridor development while the M7 has seen numbers pick up due to congestion on alternative roads. MRE expect these assets to continue to perform. Despite MIG selling off some of its interests in the U.S. those assets continue to disappoint, but as mentioned, the exposure to U.S. assets have been reduced. A major focus for MRE was the figures that the M6 reported. The results were weak with the report showing a 10 percent decrease in traffic. MRE highlight that if this road continues its poor performance then there needs to questions raised over the toll price path.

MRE retain it’s outperform recommendation due to MIG trading at a deep discount to its NPV valuation and a $4.10 price target. MIG is well cashed up and has a strong balance sheet with no major need to refinance which is a large positive in the current economic environment.