Aurizon has announced a new 10-year commercial agreement with its coal mine customers for pricing its Queensland network. If agreed to by the regulator, this will replace some parts of the four-year UT5 regulatory decision.
Credit Suisse observes the network has suffered from a dysfunctional regulatory environment in the past six or so years and this new deal could significantly improve investor views of the quality of the network business.
Outperform rating maintained. Target is raised to $5.50 from $4.90.
Sector: Transportation.
Target price is $5.50.Current Price is $4.88. Difference: $0.62 – (brackets indicate current price is over target). If AZJ meets the Credit Suisse target it will return approximately 11% (excluding dividends, fees and charges – negative figures indicate an expected loss).
