The company will sell its 40% stake in the Bengalla JV to New Hope ((NHC)) for $860m. Morgan Stanley estimates after-tax proceeds of $658m versus a valuation of $843m, meaning the transaction would be around -2% dilutive to FY20 EPS.
With this transaction, Wesfarmers completes its exit of the resources business. Underweight rating retained. Industry view is Cautious. Target is $42.
Sector: Food & Staples Retailing.
Target price is $42.00.Current Price is $50.08. Difference: ($8.08) – (brackets indicate current price is over target). If WES meets the Morgan Stanley target it will return approximately -19% (excluding dividends, fees and charges – negative figures indicate an expected loss).