I think most retail investors just see this stock as a...

I think most retail investors just see this stock as a standalone toll road. The truth of the matter is that CEU will probably become the next TCL.

With all of the feeder traffic links that will probably be tolled by the VIC govt in the next few years CEU will have more than just one tolled roadway.

In the next few months a review of the traffic situation will be released and you can bet the report will say that one of the feeder raods should also be a PPP.

You dont have to be a rocket scientist to workout that CEU will be in pole position to bid on the new road given it will probably link directly into the EastLink road. When this happens the market will also see this as a growth asset because of all of the extra traffic the road will probably bring to EastLink.

The projections in the orginal PDS for CEU dont make mention of this extra traffic boost but you can bet TCL knows all about it.

The only reason why CEU is not already owned by TCL is the pressure that the fund managers (IML etc) with hold big holdings in TCL put on TCL's management not to takeover CEU. The main reason they argue is that TCL will pay too much. Well if just one new PPP comes up and CEU get it TCL will be making a big mistake not taking out CEU.

A manager like IML hasnt been performing great of late (last3 years) in part due to the sluggish performance of stocks it holds such as TCL and TLS (its sold most of its CEU), so you could imagine what IML's performance would be like if TCL made a cash offer for CEU. I think that part of the reason that managers dont want TCL to takeover CEU because their performance will get hurt, and guess what? the inflows into their managed funds might suffer, if that happens the fund manager makes less from the management fees. I might be a bit skeptical but it isnt hard to see why people like me might see it like this.

My personal view is that CEU should focus on getting EastLink fully opperational and beat the traffic forecasts, get a few new PPP's that feed into EastLink and then wait for the international Pension funds and Sovereign funds to come along with a massive cash offer and take the asset private.

Just look at Dubai Port World and the Ontario Teachers pension fund. These massive entities are going around the world buying up infrastructure assets and then managing them privately (ie delisting them). When CEU has the total package the market will discount its value and these cashed up investors will take these assets.

You only need to look at what is happening in the US and around the world will the big investment banks (Citi, Merrill etc) to see the role these big investors are playing.