SeaLink Travel’s acquisition of Transit Systems transforms the company, the broker suggests, providing exposure to metro bus services in Australia, Singapore, and London. Transit Systems’ advantage is its ability to manage margins against contract terms, the broker notes, with revenue not exposed to passenger and fare risk.
Contract renewals, new contracts and the trend towards bus privatisation should support SeaLInk’s performance over the medium term. The broker initiates coverage with an Outperform rating and $4.48 target.
Sector: Consumer Services.
Target price is $4.48.Current Price is $3.98. Difference: $0.50 – (brackets indicate current price is over target). If SLK meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges – negative figures indicate an expected loss).