commsec valuation for aio

The following is the Commsec valuation for AIO.

Every time they provide their(unfair) valuation ,the stock moves up.


Asciano Limited: Implications of potential QR coal sale

Last Traded: $1.50

Market Cap: $959M

Sector: Industrials Summary of report dated 03/06/09
SELL / UNDER PERFORM

Valuation: $1.28

What¡¦s new? On 2 June the Queensland Government flagged its intention to sell a number of Queensland Government owned assets over the next three to five years including Queensland Rail Coal (QR Coal) and the Abbot Point port and terminal. Queensland Rail (QR) is currently Asciano Limited¡¥s (AIO) key competitor for its coal rail operations. QR also competes with AIO in interstate rail operations and the bulk haulage of other mining and grain products. The announcement of the QR asset sales could place some pressure on AIO in negotiating the sale of its assets. However, the sale of QR is years away and therefore unlikely to have a material impact on the AIO monetisation process. The full or partial sale of AIO¡¥s coal business would provide a benchmark for a potential sale price for QR Coal. AIO has previously advised it would update the market on its monetisation process including the preferred option and likely realisation proceeds by the end of the second week in June. Implications for AIO
„o Short term ¡X AIO could have opportunity to capitalise on QR¡¥s potential loss of focus as it faces the challenge of determining what will be sold and when.
„o Medium term ¡X AIO would be precluded for competition reasons from buying the QR Coal business but could be interested in Queensland coal terminals and the Abbot Point port - of course, this would be dependent on AIO¡¥s ability to raise funding.
„o Long term ¡X The sale of QR Coal may provide additional competitive pressure on PN as a private operator would have more flexibility with implementing industrial change and could bring international experience. However, this market is a duopoly so the extent of pressure is likely to be limited.
In terms of AIO¡¥s monetisation process, CommSec continues to perceive risks around the competition for assets and therefore the price that would be able to be achieved through monetisation. There are also risks surrounding the timing/ execution of the monetisation process in addition to earnings risk should container ports and intermodal volumes continue to decline. We retain our SELL/UNDER PERFORM recommendation and our valuation is unchanged at $1.28 per share.