Credit Suisse includes the estimated impact of a $4.1bn hybrid issue. With an average coupon of around 4.94% this represents an estimated spread of around 400 basis points over the bank debt being repaid.
The broker believes this is a better alternative than a dilutive equity raising and down the track, if conditions improve, equity can be issued or interests in some of the assets can be sold.
Credit Suisse lowers estimates for 2020-2022 and reduces the target to $2.73 from $2.81. The stock is trading at a deep discount to net tangible assets and the Outperform rating is based on the broker’s view that the stock is undervalued.
Sector: Real Estate.
Target price is $2.73.Current Price is $2.22. Difference: $0.51 – (brackets indicate current price is over target). If SCG meets the Credit Suisse target it will return approximately 19% (excluding dividends, fees and charges – negative figures indicate an expected loss).