Posted this on the TCL page and here for those who are interested.
Indeed there is the fear of rising fuel prices. But when you look at the likes of CEU you find that even after paying a $5 toll, there will be time + fuel savings for the motorist.
Also keep in mind that CEU is in a high population growth corridor of Melbourne ie. even if some people dont use cars there are more people coming through to offset that.
And with CEU there is essentially no other method of transport along the north-south corridor. If you want to go from Frankston to Nunawading and anywhere in between then there's really not much of public transport available. That can really only change with a massive Government spend on rail infrastructure and that's very unlikely.
If CEU was essentially heading into and out of the City centre, like CityLink does, you could argue if people use trains instead of cars it could impact on CEU traffic numbers but there's no public transport competitor along the CEU corridor.
As for rising fuel costs, people say prices have risen, but have they - really? Even at $1.50 a litre, I can remember in 2000, fuel first reached $1.00 a litre. So in 8 years fuel has risen 50%, so what's that exactly, about 6% a year? Higher than the 3% or so in inflation but hardly rampant price rises.
As for RCY - it has indeed been an ugly story. Hard to put your finger on exactly why it's been dumped so strongly but clearly concerns over traffic projections and the tunnel infrastructure. I think the disappointment with the Sydney Harbour Tunnel may be a factor there.
In any event, CEU has now open 4 of 5 shop fronts with the 5th to be open in a month. The weather here in Melbourne is holding well with little rain so it will be construction at a hectic pace over at CEU. April/May opening most likely.
As for takeovers, its clear that TCL and the rest are wanting to wait for CEU to be up and running before they go for it. TCL or an infrastructure fund will have to pay a premium therefore but in any event, a takeover is likely within 5 years - my usual investment time horizon.
CEU Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
