Management has indicated there is increasing demand for the warehouse space at Moorebank Logistics Park but the capital expenditure required is higher than previously expected. Despite the potential efficiency benefits Credit Suisse suspects lease rates are unlikely to be better than market levels.
Management has indicated it may take 2-3 years for container volumes to reach break-even. Credit Suisse lowers FY20 net profit estimates by -3%, partly because of a slower ramping up in activity than previously assessed.
The broker’s cautious view is based on subdued economic activity and a weaker outlook for agricultural volumes. Underperform maintained. Target is raised to $2.80 from $2.55.
Target price is $2.80.Current Price is $3.16. Difference: ($0.36) – (brackets indicate current price is over target). If QUB meets the Credit Suisse target it will return approximately -13% (excluding dividends, fees and charges – negative figures indicate an expected loss).