BA-Merrill Lynch 13/10/2009 1 Buy, Medium Risk $5.75 36.9% In a climate of "shining" September traffic numbers, the broker believes Transurban is close to reaching an agreement with the NSW Mafia on widening the M2, which TCL would have to fund alone. This would be funded by 50/50 debt/equity, as management has previously indicated, thus suggesting a capital raising of about $250m, the broker notes.
But wait, there's more. It would also make perfect sense for the broker to acquire the crumbling Lane Cove Tunnel given it is an extension of the M2, and M5 wideneing is also up for grabs. Acquisition of the LCT would take TCL's net capital raising requirement to about $600m, the broker believes.
JP Morgan 13/10/2009 3 Neutral $5.30 26.2% September quarter traffic growth for the group was slightly stronger than the broker had expected and to reflect this it has made minor increases to its earnings forecasts.
With few obvious catalysts at present the broker retains its Neutral rating with no change to its price target.
TCL Price at posting:
$4.18 Sentiment: None Disclosure: Held
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