Duet Group (DUE) has a maintained Outperform recommendation and a $3.80 12-month stock price target per share.

Duet Group (DUE) : Masters of Bunbury

Duet Group (DUE) welcomed the announcement by Dampier Bunbury Natural Gas Pipeline (DBNGP) of the $660m completion of the Stage 5A expansion project on time and within budget. Mr Hohnen, Executive Chairman of DBP, said that the pipeline is the “backbone of Western Australia’s flourishing energy economy.” The Stage 5A expansion significantly increases the pipeline’s capacity, contributing to continued economic growth in WA, growing electricity demand and climate change initiatives.

DBNGP is majority owned by DUET Group and is the only natural gas pipeline connecting the Carnarvon Basin Basin in Western Australia with Perth and its surrounding region.

Impact

• Stage 5B (includes 5A) will cost $700m and increase capacity by 110 terajoules per day.
• Duet earns a 14% internal equity rate of return on all capex spent on the pipe. The equity return is after debt costs which are passed on to shippers, providing The Duet Group with a low risk, value accretive earnings stream.
• DUE estimates it will require only $60m of equity to fund its stake in the expansion.
• Macquarie Research (MRE) stress more capital expenditure results in more value for DUE. The capex includes looping 400km of pipe and some compressor upgrades.

Duet Group (DUE) Action and Recommendation

MRE maintain their Outperform recommendation for Duet Group (DUE) with a 12 month price target of $3.80. DUE stock traded as low as $3 during this morning’s session, down ~2.5% this morning.