GIVEN QR National's dazzling debut a month ago, rival Asciano...

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    GIVEN QR National's dazzling debut a month ago, rival Asciano has been perceived as better value.

    Asciano (AIO) $1.665

    Now we have some solid proof, albeit on the ports (Patrick) side.

    Citibank Infrastructure has paid $1.5 billion for 75 per cent of stevedore DP World (branded as P&O), Asciano's dockside rival in five capital cities. This implies an enterprise value for the whole DP business of $1.82bn, or 13 times expected calendar 2010 EBITDA of $140 million.

    Macquarie Equities values Asciano's ports operations on a multiple of nine to 10 times, which results in a valuation gap of $773m (26c a share).

    It's possible Citi is "overpaying", at least on the short-term numbers, because infrastructure funds take a long-term view.

    DP World should see improved earnings in 2011, given it had teething troubles with new cranes and IT systems.

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    Criterion had Asciano as a long-term buy at $1.64 on November 24 and maintains the call. According to Goldman Sachs, the deal is likely to accentuate the reality that Asciano is not being rewarded by the market for having a combined ports-rail business. In other words, don't be surprised if ownership of Chris Corrigan's old Patrick business changes again.
 
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