Earnings lifted in the second half of FY19 and beat Morgans’ forecast. Excluding customer contributions, operating earnings (EBITDA) were flat but still exceeded forecasts by 4%. Distribution guidance of 10.2c per security for FY20 implies 5% growth on a cash yield of 5.6%.
While not willing to commit to sustaining this level of distributions through the next regulatory re-set, the company indicated it had good visibility on earnings, amid traction on its cost reduction program and a growing unregulated investment pipeline.
Morgans maintains a Hold rating and raises the target to $1.74 from $1.73.
Target price is $1.74.Current Price is $1.83. Difference: ($0.09) – (brackets indicate current price is over target). If AST meets the Morgans target it will return approximately -5% (excluding dividends, fees and charges – negative figures indicate an expected loss).