UBS rejigs forecasts to allow for the $4.8bn equity raising and $4.4bn acquisition of a 25.5% stake in WestConnex. This results in dilution of around -20% until WestConnex generates meaningful cash flow distribution from 2024.
Dividend forecasts have been modeled to grow by 6% per annum over the next 10 years. UBS expects WestConnex to generate $1.7bn in operating earnings by 2028 which will account for 10% of the group’s earnings. Buy rating maintained. Target is reduced to $13.30 from $13.35.
Target price is $13.30.Current Price is $11.34. Difference: $1.96 – (brackets indicate current price is over target). If TCL meets the UBS target it will return approximately 15% (excluding dividends, fees and charges – negative figures indicate an expected loss).