The company has a draft agreement to shift to distance-based tolling on Greenway. This would incur a large capital cost and the major benefit would be long-term certainty on pricing. This is not a surprise to Macquarie, as it was recommended back in 2016.
The legislation needs to be approved by Congress in the January-February sitting which will provide certainty for 2020 and beyond. The broker estimates a minor decline in 2021 and 2022 dividend expectations while there is a long-term increase because of a better tolling regime.
Outperform maintained. Target is raised to $7.49 from $7.25.
Target price is $7.49.Current Price is $6.80. Difference: $0.69 – (brackets indicate current price is over target). If ALX meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges – negative figures indicate an expected loss).