For everyone's info from Egoli.We are beginning to warm to the...

For everyone's info from Egoli.

We are beginning to warm to the idea of buying infrastructure stocks. The sector smells like its in play, with reports surfacing that MIG is about to receive a bid. Infrastructure stocks have been somewhat unloved of late as a result of higher interest rate concerns domestically. However, with recent pullbacks and corporate activity talk, we believe its time to be buying. Go long connect through CEUIZY.

The chart above is a pretty sight. CEU is clearly in uptrend, and with no sign of this trend reversing, now looks like a good time to be buying while its back at its medium term uptrend line. ABN AMRO has a price target of $2.09 on CEU leaving ~25% upside.

The CEU tollway in Melbourne is expected to open Feb/March 2008, which is only just around the corner and a huge potential share price catalyst. This opening will be 8-9 months ahead of schedule. With a 6.5% yield and 25% upside to our target price, it’s a stock worth owning here.

So on the corporate activity front…. The most likely acquirer of CEU is TCL who owns a 6.3% stake already. TCL has proven their appetite for toll road acquisitions in the past, and once CEU puts some runs on the board, TCL may start having a closer look at increasing its stake… to 100%.