Toll Holdings

Here is an update on the different sectors of Australian market from market analyst Macquarie Research Equities.

Record Oil - The Impact of Black Gold

Toll Holdings (TOL) has a $8.00 share price target from Australian stock analyst Macquarie Research Equities.

Toll Holdings Ltd (TOL): No Parachute Required

VBA look no strings — VBA Management has confirmed current plans for FY09 involve no parental nor external funding based on jet fuel US$160bbl (CIR $167). We assume no funding is provided by TOLL at any stage for VBA.

Toll Holdings (TOL) has a share price target of $8.60 from Australian market analyst UBS.

Toll Holdings (TOL) Discount to fair value likely to continue

Earnings changes for Virgin Blue:

We are cutting our Toll EPS forecasts by 14% in FY09 to reflect our separately published Virgin Blue downgrades. Our transport earnings remain unchanged, although risk is probably to the downside given expectations for slowing economic growth and an inevitable lag inpassing through fuel cost rises.

We see three key share price drivers::

The Toll Holdings Limited (TOLL) current share price has a implied reduction in domestic growth from 7% to 3% with margin decline too aggressive from Australian stockmarket analysts from Citi.

Toll Holdings Ltd: Rationalising Risk

Upgrade to BUY — Sale of NZ rail and ferry assets removes an element of risk and switches focus back to domestic ops. Current share price implies a reduction in domestic growth from 7% to 3% with margin decline which looks too aggressive in our view. We have not changed our forecasts at this stage.

Toll Holdings have a reinstated Buy 1 broker call and a stock price target of $16 from Australian shares analyst UBS. Australian business is a 8-11%pa topline grower: Following a period of research restriction and Toll Holdings' demerger of Asciano, we are reinstating with a Buy 1 rating and a A$16.00 price target. The key to Toll Holdings’ investment thesis is its ability to sustainably generate 8-11%pa topline growth and ongoing margin expansion by virtue of its dominance, scale and integration in Australia. EPS accretion inevitable from A$3bn debt capacity: With forecast FY08 net debt of only A$0.4bn, they believe Toll Holdings has capacity for A$1.3bn in acquisitions and this increases to A$3.5bn after a sale of Virgin Blue. They calculate the debt versus equity arbitrage on this capacity alone (without synergies) would provide Toll 7% and 20% value accretion respectively. Virgin Blue stake likely to be diluted: They estimate Toll Holdings' 63% stake in Virgin Blue will account for 30% of its proportionate EBITA in FY08. Management is cognisant of the market’s nervousness of this exposure and they believe the market wrongly assumes significant value dilution from its sale. EPS dilution is inevitable, but they estimate value dilution could be as little as only 3%. Their A$16.00 price target reflects a 12-month forward version of their current SOTP-derived A$14.30 valuation, an additional A$1.00 from deploying A$1.3bn in acquisitions, and A$0.40 of value dilution from divesting Virgin Blue.