APA Group has reached a final investment decision on the expansion of the east coast grid, adding 25% for a capital investment of $270m. Expansion was expected as a result of the failure to gain approval for the Crib Point LNG terminal.
Macquarie finds it a positive turn that the company is signing shippers for additional capacity, having extended its contract with Origin Energy ((ORG)). Pricing is relatively flat.
Further contracts are expected with AGL Energy ((AGL)) and Energy Australia. Outperform maintained. Target is reduced to $10.40 from $10.50.
Sector: Utilities.
Target price is $10.40.Current Price is $10.00. Difference: $0.40 – (brackets indicate current price is over target). If APA meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges – negative figures indicate an expected loss).
