Third quarter traffic and revenue declined -2.7% and -1.9%, respectively, which was was 2% ahead of Morgans forecast. Traffic is considered to have benefited from the relaxation of covid-19 restrictions from May-July. Also the start of the summer holiday season assisted.
However, signs for a continuing recovery into the fourth quarter are not good, according to the broker. Atlantia’s Abertis French toll road network, which releases weekly data that has correlated closely with the APRR’s performance (in Eastern France), has seen traffic deteriorate since peaking in August. Traffic was down around -10% in the first week of October and the analyst is concerned that daily new cases of covid-19 in France have been growing rapidly.
Morgans base case assumes the APRR’s traffic returns to trend growth by FY22, despite downgrades to short-term expectations.
At current prices, the broker estimates a 12-month potential total shareholder return of 19%.
The rating is upgraded to Add from Hold and the target price is increased to $7.01 from $6.83
Target price is $7.01.Current Price is $6.23. Difference: $0.78 – (brackets indicate current price is over target). If ALX meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges – negative figures indicate an expected loss).