Lendlease has an agreement with Acciona for the purchase of its engineering business for $180m, less selling costs and working capital adjustments.
Two of the three projects which led to provisions being made in late 2018, NorthConnex and Kingsford Smith Drive, are excluded from the deal. Melbourne metro is currently excluded but subject to negotiation.
Citi assesses this reflects the first step in the process of exiting the engineering business.
The broker is confident there is potential for a multi-year re-rating as the business model evolves to a global real estate developer and fund manager. Buy rating and $24.72 target maintained.
Sector: Real Estate.
Target price is $24.72.Current Price is $18.04. Difference: $6.68 – (brackets indicate current price is over target). If LLC meets the Citi target it will return approximately 27% (excluding dividends, fees and charges – negative figures indicate an expected loss).
