At this stage the broker is forecasting a -70% drop in car and -45% in truck traffic on the APRR for another three months but notes as lockdowns begin to be eased from mid-May, activity should improve. This would reduce the risk around debt covenants.
The broker suggests that while the potential of limited yield for the next 12 months is a negative, this is well and truly offset by the potential of a growth option from a concession extension. The company’s leverage is lower than peers but its structure creates uncertainty, the broker notes, however this can be substantially addressed with cash retention. Target falls to $6.90 from $7.14, Outperform retained.
Sector: Transportation.
Target price is $6.90.Current Price is $5.54. Difference: $1.36 – (brackets indicate current price is over target). If ALX meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges – negative figures indicate an expected loss).
