MIG: Ben’s favourite stock in the market (apart from WDC) and he...

MIG: Ben’s favourite stock in the market (apart from WDC) and he quite rightly has pointed out that the stock has been treated like a drovers dog of late. There does seem to be quite strong price support around the $3.60 - $3.65 level. We’d be a buyer around these levels. Earnings certainty and discount to valuation and price target make this an attractive entry level. Traffic data for their roads in October shows continued strong growth on H407 whilst the M6 Toll is mirroring the UK's seasonal declines into the winter period. The good news is that we think that underlying growth on the M6 Toll is likely to pick up again in 1H05 as general traffic increases again. The robust performance of MIG's assets will underpin the current share price, whilst resolution of key issues in three-six months on Highway 407 and M6 Toll should provide catalysts for a re-rating. We expect strong results on MIG's roads to continue, driving cash flows higher. Potential catalysts will be resolution of the H407 disputes and strong traffic performance on M6 Toll. Our valuation and price target is A$4.15, based on a risk-free rate of 5.75% and risk premiums of 3.25% for Highway 407 and 4.00% for M6 Toll, MIG's two key assets. The only real risks to the valuation include traffic growth rates (which we don’t view as much of a risk at all) and bond yield changes. The call? At these levels, if you’re owning a buy, BUY ‘EM. Period.