APA Group has committed to a $270m, two stage, brownfields expansion of two pipelines for targeted commissioning during 2023, increasing capacity by around 25%. This is to meet the potential east coast gas supply shortfall projected by AEMO for winter 2023.
The broker highlights there are no long-term take-or-pay contracts underwriting the investment, as the group is relying on the strength of future market demand. The higher risk is expected to earn a higher return, which the broker has largely factored in to estimates.
Add rating. The target price is decreased to $10.53 from $10.59.
Target price is $10.59.Current Price is $10.00. Difference: $0.59 – (brackets indicate current price is over target). If APA meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges – negative figures indicate an expected loss).