MBL

Macquarie Infrastructure Group (MIG) has a $3.55 share price target and an Outperform recommendationfrom Australian stock analyst Macquarie Research Equities.

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Macquarie Bank shares have a reiterated Buy rating and a $117.42 price target from sharemarket analyst Citi Investment Research. Following a bumper FY07 result (NPAT +60%) and flying start to FY08e, MBL earnings remain firmly in upgrade mode. The analyst's has revised EPS forecasts by 10% p.a. and view the pending capital raising as a bullish sign given the balance sheet flexibility CIR see the conversion to a NOHC structure as providing. Their target price rises 11% to $117.42. Core EPS +47% to $5.62; Core NPAT +60% to $1.46bn; Operating Income +49% to $7.18bn – this was around 4% ahead of market consensus. DPS was $3.15. Notably, international income rose 70% and represented 55% of total income. While broad based, the MBL result was driven by: (i) Asset realisations (strong gains on MGQ, DXL and an oil & gas asset); (ii) Trading / Broking (strong equity and derivative markets across Asia Pacific); (iii) M&A (advising BAA, Thames Water & Promina); and (iv) Base fee growth (AUM +41%, particularly strong growth in 2H07 should see a strong FY08e uplift). While this should be viewed against the pending capital raising, The analyst notes management was more upbeat than the pcp (which also coincided with an equity raising). the analysts new FY08e earnings estimates suggest 16% EPS growth and they continue to view the risk as on the upside. The group has had a flying start to FY08e with asset gains on BLY, ATM Solutions and MPML representing around 1/3rd of the analysts forecast gains. Combined with strong earnings momentum across all business units, analyst's anticipate solid consensus upgrades over the course of the year.

Meanwhile, Macquarie Bank have a Buy 2 broker call and a share price target of $110 from stockmarket analyst UBS. FY07 Result: Very strong wave of growth: MBL delivered FY07 NPAT of $1,463m, 5% above consensus. Result was driven by very strong growth in all businesses with the tailwind of favourable markets and global liquidity enabling revenue growth of 49%. Asset realisations were substantial at $1,400m or 19% of revenue. However 'core' revenue growth (ex volatile items of asset realisations and performance fees) was still solid at 15%. Macquarie bank to undertake a capital raising: The Bank has announced its intention to undertake a capital raising. They expect this to be similar to last year's raising, providing more firepower for ongoing acquisitions and seed investments in this healthy environment. Our models assume a $750m raising at $88 per share. FY08E earnings upgraded by 10%: They expect MBL to deliver $1,616m in FY08E, up 10.5% on 2007. This is based on 'core' revenue growth of 10% per half given the international rollout, plus an assumed 30% ROE on MBL's current seed assets, capital raising and excess Tier 1. Positives for Macquarie Bank (MBL): (1) International growth & diversification (2) Balance Sheet inventory underpins earnings (3) ahead of peers on Specialist Funds. Risks: (1) Moving up risk/return curve with bigger positions (2) Macro factors. PT is SOTP based. NOTE: MBL shares are currently in a trading halt.

Macquarie Bank (MBL) has a reiterated Buy rating and a $105.94 share price target from sharemarket analyst Citigroup Investment Research. Result Preview and Earnings Upgrade: In reviewing MBL's lead indicators and taking account of recent group activity ahead of the FY07 result (15 May), the analyst has upgraded its core EPS forecasts by +0%, +4% and +4% over FY07e-FY09e. They now anticipate 56% growth in FY07e NPAT to $1,427m against company guidance of "at least 50%" NPAT growth. Their share price target rises 4% to $105.94. Three Key Drivers to Macquarie Bank: While FY07e growth was broad-based, The analyst highlights three key drivers: (i) Asset realizations (aided by gains on MGQ, DXL and an oil & gas asset); (ii) M&A advisory (with transactions involving BAA, Thames Water, Promina, Developers Diversified Realty and Alinta); and (iii) Stockbroking (given strong equity and derivative volume growth in Australia, Hong Kong and Singapore). Unlisted Fund Success Breeds More Success: The news that two of MBL's unlisted infrastructure funds (MEIF II & MIP) will extend their EUM to US$10.3bn suggests that the success of these funds continues to breed new success. This bodes well for continued growth in group EUM, base fees and M&A fees. Flying Start to FY08e: Together with a significant level of asset gains in April, the group is off to a flying start in just the first month of its new fiscal year. The asset gains CIR estimate for Boart Longyear ($200m) and ATM Solutions ($68m) represent 36% of asset realizations forecast in FY08e. Buy Rating Reiterated: The analyst reiterates their Buy rating and $105.94 target price for Macquarie Bank (MBL) with the stock continuing to trade on an undemanding FY08e PER of 15.2x and a strong tailwind with regards to earnings momentum across the business.

Macquarie Bank (MBL) has a retained price target of $102.29 per share from market analyst Citigroup Investment Research. The main impact of the proposed conversion to a Non-Operating Holding Company (NOHC) is the potential gearing up of the non-banking operations which the analyst believes could behave like a $2.4bn equity raising without any share issuance. This could add up to $9.40ps (or 9%) to analyst valuations, excluding any asset sale gains. This level of flexibility in the non-banking group's post-NOHC balance sheet could provide acquisition firepower of up to $8bn given the typical level of non-recourse debt applied to seed assets –or exposure to as much as $50bn worth of assets if the increasing trend of consortium deals continues (where MBL takes a 10%-15% equity stake). M&A fees on $8bn of acquisitions could amount to $80m-$120m before any asset gains, although consortium deals where Macquarie Bank (MBL) acts as financial adviser could see M&A fees reach $1bn on $50bn of asset value, triggered by: (i) consortium acquisition; (ii) MBL selling down to its satellites; and (iii) consortium divestiture. While the potential conversion to a NOHC structure is still in its infancy (let alone any implications that follow), the analyst retains a $102.29 target price, predicated on positive EPS momentum across the group's business and an undemanding valuation with the stock trading on a FY08e PER of 14.8x.

Macquarie Bank (MBL) have a Buy 2 trading recommendation and a price target of $96 per share from analyst UBS. The Macquarie Bank consortium offers to buy Spirit Finance (NYSE:SFC) for $14.50 per share. MBL has announced that it will invest US$250m (A$320m) for a lead minority stake in a consortium to acquire SFC, a sale & leaseback investment trust. Its offer of US$14.50 ps values SFC at US$1.57b (EV US$3.5b), representing a PE of 13x (2007E consensus) and 1.6x book. SFC may solicit superior proposals until 9th April. Spirit Finance (NYSE:SFC) is US real estate investment trust focusing on the sale & leaseback. Its investment portfolio is US$2.8b, incl 1,034 properties from 145 customers in 43 states. Properties include general retail (28%), restaurants (22%), specialty retail (10%) as well as cinemas, car yards & other single tenant properties. It has seen strong EPSg, but an underperforming share price (detailed financials within). Further rollout of MBL's seed asset/ specialist fund model; Macquarie Bank has seen an acceleration of its seed asset recycling, selling A$1.3b of assets and acquiring a new A$1b in the 4 months to January the investment bank intends to incubate & restructure its SFC investment on its Balance Sheet before selling it to a MBL specialist fund. Positives for the bank: (1) International growth & diversification (2) Balance Sheet inventory underpins earnings (3) ahead of peers on Specialist Funds. Risks for Macquarie Bank: (1) Moving up risk/return curve with bigger positions (2) Macro factors. Price target is SOTP based.

Macquarie Bank (MBL) have a reiterated Buy rating and a raised target price of $102.29 per share (up 5 percent) from stock analyst Macquarie Research Equities (MRE). MBL has upgraded earnings for the second time within a month, with estimated FY07 NPAT to rise "at least 50%" on the pcp. CIR have upgraded their core EPS forecasts by 4%, 4% and 2% over FY07-FY09 estimates. The guidance uplift appears broad based with favourable market conditions and transaction levels improving across most business units. Importantly, CIR cannot identify any significant asset sales that may have transpired in the past four weeks, suggesting the uplift is more operational.The analyst have carried though the FY07e earnings upgrade to FY08e given the greater certainty surrounding the likely profit on sale of much of the group's interest in Boart Longyear (around $315m). Earnings momentum across most of the group's business units remains strong (AUM, broking, trading, M&A, loans), suggesting further upside earnings risk. However, the valuation is still undemanding, with CIR's high-end FY08e forecast suggesting a PER of 14.3x – a 13% discount to the All Industrials PER of 16.4x. Note CIR's FY08e forecast is predicated on just 5% EPS growth – which could well prove conservative.

Meanwhile, another stock analyst, UBS have given the investment bank a Buy 2 broker call and a price target of $96. The analyst has commented that Macquarie Bank (MBL) provided its second upgrade in a month. It now expects profit for 2H07 (ending 31 March) to exceed 1H07 profit of $638m (ex MGQ). This compares to its prior trading statement in early February that NPAT would be slightly below 1H07. This new guidance implies FY07 profit will be up by at least 50% on FY06. Today's 3% upgrade to 2007 follows a 5% upgrade on 6th Feb. This was driven by a very strong February across the business. In particular the Investment Bank undertook a number of substantial deals while trading conditions were very good. If market conditions stabilise through March we see further upside risk to our earnings forecasts. Macquarie Bank has seen a rapid acceleration in its asset recycling. As at 30 Sept MBL had $1,833m in seed assets on BS. Since then it has sold $1.3b in assets and acquired $987m of new assets. This (1) addresses concerns over rising capital intensity (2) Seeds growth in off BS FUM (3) generates revenue from profit on sale. Positives that analyst UBS have identified about Macquarie: (1) International growth & diversification, (2) Bal Sheet inventory underpins earnings targets, (3) ahead of peers on Specialist Funds experience. Risks for Macquarie Bank identified by the analyst: (1) Moving up risk/return curve with bigger bets (2) Markets/macro factors. Our PT is based on a SOTP.