endat Recommendations Aegis Equities Research...

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Recommendations
Aegis Equities Research View:
Recommendation: BUY






Consensus View:
Number of Brokers: 11
Average Reco: Buy
Median Reco: Buy






Company Summary
Activity Summary - CEU was the successful tenderer to finance, design, construct, operate and maintain a 39km roadway between the Eastern Freeway in the eastern suburbs of Melbourne and the Frankston Freeway in Melbourne’s south-east. The contract runs for a maximum period of 39 years. Construction is targeted to finish in 2008.

Investment View (overall) - CEU is expected to generate positive cash flow at the completion of its ramp-up period in early 2010. CEU is a simple, single-asset infrastructure-vehicle investment with low management fees relative to its sector. We continue to view CEU favourably and rate it as a sound medium- to long-term growth toll-road investment.

Investment View (over the next 12 months) - EastLink opened on 29 June 2008, on budget and five months ahead of schedule. Traffic volumes in the first four weeks of tolling were below expectations, however we expect volumes to pick up in the coming months as motorists increase their patronage of EastLink to take advantage of the potential time savings. We have a positive view of CEU on a 12-month view.