CEU - Connect East Group
- Thread starter anniswan
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It is highly likely this stock will always have the speculation of a TCL takeover looming over it... which can only be a good thing...
I live in the area and strongly believe this road will have huge volumes... people in melbourne have proved to be more than happy to pay tolls for quick trip times and this road offers a lot of people the mother of all time-savings... the growth in population in the outer-east will continue to support this road also...
I live in the area and strongly believe this road will have huge volumes... people in melbourne have proved to be more than happy to pay tolls for quick trip times and this road offers a lot of people the mother of all time-savings... the growth in population in the outer-east will continue to support this road also...
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Eastlink flyover video...
Heres the vid of the east link just followed it on my Melbourne book,never run into that part of melbourne as i always prefer the cushy
runs into somerton or laverton,anyhow here it is...tb...go to home for the toll charges...
you got a better deal than us up here in sydney,you get cheaper weekend rates...wow...sydney pay same all week...
http://www.seita.com.au/pages/video-library.asp
Heres the vid of the east link just followed it on my Melbourne book,never run into that part of melbourne as i always prefer the cushy
runs into somerton or laverton,anyhow here it is...tb...go to home for the toll charges...you got a better deal than us up here in sydney,you get cheaper weekend rates...wow...sydney pay same all week...
http://www.seita.com.au/pages/video-library.asp
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Interesting to see they keep declining, I thought their might of been some upwards movement with all the media coverage of the opening.
DeGiles, this is one reason why I'm staying in the resource/energy sector at the moment. CEU listed at around $1.15 and hit a high of almost $2 which I think was due to speculation that Transurban might look at them as a takeover target. They're at all time lows at the moment. I sold a significant parcel at a 10-15% loss recently but did make a couple of small successful trades along the way. You'd think when the thing opens in a couple of weeks that it might stimulate some interest. Surely it won't go much lower!!
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Im not too sure about CEU shares.
When transurban developed the monash freeway they were able to close a lot of other roads around the are so that people were more likely to travel along it. ConnectEast were unable to do this.
Also, I believe that there would be a great deal of people in the Eastern suburbs that will refuse to use the toll road by principle, since it was initially meant to be a FREEway.
Still, there should be a good flow of revenue coming in and not a great deal of costs, unless anything goes dramatically wrong....
With the dividend I think it is probably still worth a look...
When transurban developed the monash freeway they were able to close a lot of other roads around the are so that people were more likely to travel along it. ConnectEast were unable to do this.
Also, I believe that there would be a great deal of people in the Eastern suburbs that will refuse to use the toll road by principle, since it was initially meant to be a FREEway.
Still, there should be a good flow of revenue coming in and not a great deal of costs, unless anything goes dramatically wrong....
With the dividend I think it is probably still worth a look...
I think your assessment is correct. Since there are alternatives, when times are hard (indications say they will be!), trips along this toll way will be the first to go.
Still, I think it's extreme cheap if a recession doesn't eventuate!
QUOTE
With the dividend I think it is probably still worth a look...
Someone please correct me if I have this wrong but I'm under the impression that the dividend is being paid from borrowings, raised on the strength of the perceived value of the asset, rather than from actual earnings.
With the dividend I think it is probably still worth a look...
Someone please correct me if I have this wrong but I'm under the impression that the dividend is being paid from borrowings, raised on the strength of the perceived value of the asset, rather than from actual earnings.
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true... the argument previously was that with petrol price so high, you wouldnt actually be better off taking an alternative route... however, oil is coming down and that will soon be reflected in petrol prices...
the other thing a toll road does it shares the traffic burden... so the alternative routes now are much much quicker than they were previously...
and yes divs at this stage are really being paid out of debt... not a good model... check Brisconnections BCSCA or RCY for proof of that...
Sean K
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This has got TAKE ME OVER written all over it now.
LONG term, it will turn a profit. Melbournes public transport system is a joke, people have to drive. The eastern suburbs are still expanding. This toll road will be an absolute cash cow in years to come. Probably quite a few, but surely...
This is not a Bris Connections. Um, or is it?? Maybe there's some refinancing to be done, that won't appear?
Transurban must be licking their lips right now, it's a sitting duck. Not sure of the corporate structure. Perhaps too many big banks have big slices?
LONG term, it will turn a profit. Melbournes public transport system is a joke, people have to drive. The eastern suburbs are still expanding. This toll road will be an absolute cash cow in years to come. Probably quite a few, but surely...
This is not a Bris Connections. Um, or is it??
Maybe there's some refinancing to be done, that won't appear?Transurban must be licking their lips right now, it's a sitting duck. Not sure of the corporate structure. Perhaps too many big banks have big slices?
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Hi Kennas,
Well, I have been following CEU for 18 months,
my main guide is JBwere research...
It was oh so happy... ah.. 18 moths ago! ha... when i bought..(but sold 2 months later with 12% loss)
and even though they are making money, they have yet to hit their projected goals in terms of avg distance traveled and avg toll.
but... the real issue, is debt. they have a lot.
yes, the first bit is not due for role over until 2011 and it could well be no issue by then. but, if things have not improved... jbwere says no more dividends for 3 years.
Now im not Buffet, but an infrastructure stock that is not paying a dividend is like a car without wheels.
oh, and Leighton has a large holding.. so not sure anyone can take them over.
anyway.. just a few thoughts.
Well, I have been following CEU for 18 months,
my main guide is JBwere research...
It was oh so happy... ah.. 18 moths ago! ha... when i bought..(but sold 2 months later with 12% loss)
and even though they are making money, they have yet to hit their projected goals in terms of avg distance traveled and avg toll.
but... the real issue, is debt. they have a lot.
yes, the first bit is not due for role over until 2011 and it could well be no issue by then. but, if things have not improved... jbwere says no more dividends for 3 years.
Now im not Buffet, but an infrastructure stock that is not paying a dividend is like a car without wheels.
oh, and Leighton has a large holding.. so not sure anyone can take them over.
anyway.. just a few thoughts.
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Just an update Kennas,
this from the Eureka Report - yesterday..(its a better explanation than mine)
"By contrast, ConnectEast is in the very early stages of its toll road ramp-up. The original prospectus forecasts for ConnectEast were hopelessly optimistic but recent revenue has exceeded Doherty’s more conservative forecasts, which of course were much lower than the prospectus.
ConnectEast’s problem is that although it reduced debt with the placement to CP2 it didn’t go far enough. For the March quarter, ConnectEast's interest bill and other costs exceeded toll revenue by about $14 million. That is not a happy situation when you have $1.4 billion in net debt and a market capitalisation of about $800 million. ConnectEast’s first major debt maturity doesn’t take place until November 2010, so the group has breathing space. Despite that, the stockmarket is very clearly concerned about the overall level of debt and its ability to continue the current 2 ¢ a share dividend.
The great comfort for ConnectEast shareholders have is that there is no way CP2 will let ConnectEast fall into the hands of its bankers because the investment group will take up the required equity to reduce debt. It will be two or three years before ConnectEast becomes a revenue powerhouse and Doherty is supremely confident the current favourable early traffic indicators will justify his confidence in taking 27% of the stock at 55 ¢.
As investors are now confident that Australia does not face the sort of downturn that was widely feared, they are looking to areas of the stockmarket that are still depressed.
The key to investing in infrastructure is, first, to ensure the revenue stream is secure and does not fluctuate widely. Toll roads are great investments on this front. Power distribution networks have a similar profile although they are subject to government regulation. The problem with the current infrastructure investments is that some of our best assets were subjected to overleveraged corporate structures during the boom and, over time, there needs to be a deleveraging process so that the asset jewel can shine.
And there is no better illustration of this than Transurban, which is basically an inflation-linked income stream that is also enjoying growth of its road users. The most widely publicised illustration of a bad infrastructure ownership structure is BrisConnections. However, Doherty believes there will be value in the third BrisConnections call because the actual project is a good one. In due course they will obviously have to have another equity call to replace the equity lost.
Meanwhile, if Doherty’s sums are right then Transurban and ConnectEast are good long-term investments for superannuation funds, although you must be prepared to invest extra funds in the companies to further lower their gearing. But the more they lower debt, the greater will be their share price because they then take on the characteristic of an inflation-adjusted income stream, a wonderful investment for retirees"
this from the Eureka Report - yesterday..(its a better explanation than mine)
"By contrast, ConnectEast is in the very early stages of its toll road ramp-up. The original prospectus forecasts for ConnectEast were hopelessly optimistic but recent revenue has exceeded Doherty’s more conservative forecasts, which of course were much lower than the prospectus.
ConnectEast’s problem is that although it reduced debt with the placement to CP2 it didn’t go far enough. For the March quarter, ConnectEast's interest bill and other costs exceeded toll revenue by about $14 million. That is not a happy situation when you have $1.4 billion in net debt and a market capitalisation of about $800 million. ConnectEast’s first major debt maturity doesn’t take place until November 2010, so the group has breathing space. Despite that, the stockmarket is very clearly concerned about the overall level of debt and its ability to continue the current 2 ¢ a share dividend.
The great comfort for ConnectEast shareholders have is that there is no way CP2 will let ConnectEast fall into the hands of its bankers because the investment group will take up the required equity to reduce debt. It will be two or three years before ConnectEast becomes a revenue powerhouse and Doherty is supremely confident the current favourable early traffic indicators will justify his confidence in taking 27% of the stock at 55 ¢.
As investors are now confident that Australia does not face the sort of downturn that was widely feared, they are looking to areas of the stockmarket that are still depressed.
The key to investing in infrastructure is, first, to ensure the revenue stream is secure and does not fluctuate widely. Toll roads are great investments on this front. Power distribution networks have a similar profile although they are subject to government regulation. The problem with the current infrastructure investments is that some of our best assets were subjected to overleveraged corporate structures during the boom and, over time, there needs to be a deleveraging process so that the asset jewel can shine.
And there is no better illustration of this than Transurban, which is basically an inflation-linked income stream that is also enjoying growth of its road users. The most widely publicised illustration of a bad infrastructure ownership structure is BrisConnections. However, Doherty believes there will be value in the third BrisConnections call because the actual project is a good one. In due course they will obviously have to have another equity call to replace the equity lost.
Meanwhile, if Doherty’s sums are right then Transurban and ConnectEast are good long-term investments for superannuation funds, although you must be prepared to invest extra funds in the companies to further lower their gearing. But the more they lower debt, the greater will be their share price because they then take on the characteristic of an inflation-adjusted income stream, a wonderful investment for retirees"
Sean K
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Thanks for that, seems like a looooong term potential investment. I'm not really interested in a dividend but a turnaround story. Something that has been really heavily sold off due to short term vision. Maybe too heavily. But how low can they go, and can they go bust? I might just keep watching the chart for signs of life. Cheers.
Sean K
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mmm, kennans, you seem to be right....could be fake build up today, ive seen it happen before a sell off....but then again, it could be ready to run...someone is capping though, this i can see !!!!! will they let her run ? at 30 cents, she is cheap, no doubt about it.......i hope transurban makes an offer for her....perfect timing for it i rekn if they are astute enough. no better time imo....time will tell !
Thanks Oldskool, am also of the opinion it like a juicy apple waiting to be plucked by Transurban. I'm just hoping that price is higher that what it is now!! Maybe they will lets:iagree: others do the hard work of raising new equity to cover the current debt, and then pounce. Either way, I'm way, way down on this one. I'm hoping Rivercity will save my bacon......Cheers.
My view is that CEU's stock price has stablised. Cashflow has improved due to increase in traffic volumes and it can only get better because toll prices are indexed annually. The company has recently discontinued dividend reinvestment scheme and this is a good thing as it will stop diluting exisitng shareholdings. Coupled with any plan of future buy-back from market, this share looks good for long=term. Due to its long term "deferred tax" concession ie no need to pay tax for the distribution, it is attractive to young and old investors. The company has also commenced off road advertising recently ie. RACV, MacDonalds, Banks etc and this strategy will gradually help to generate revenue other than traffic revenue, which is the primary source.
If CEU's marketing department can convince MUM and DAD to buy the shares as a GIFT to their children or grand children, it would be "an up" for the share prices.
In order for TCL or any other potential buyer to launch a take-over, there must a good reason for the take-over ie. for the cashflow, benefits from sgnergy or reduce competition. I do not think this is going to happen soon. In order to create an interest for the take over of the company, CEU must first be able to generate enough cashflow to maintain its distribution policy and retain a small reserve or reduce its debts. Watch out for such signals.
No matter what, I am holding on to my shares. This toll road is the best thing that happened for those who live in the Eastern Suburbs. One the bottleneck at Hoddles Streets is solved and the Frankston BYPASS to Mordillac Freeway is completed, CEU should come good.
Like Arnold Swag said..... TRUST ME
If CEU's marketing department can convince MUM and DAD to buy the shares as a GIFT to their children or grand children, it would be "an up" for the share prices.
In order for TCL or any other potential buyer to launch a take-over, there must a good reason for the take-over ie. for the cashflow, benefits from sgnergy or reduce competition. I do not think this is going to happen soon. In order to create an interest for the take over of the company, CEU must first be able to generate enough cashflow to maintain its distribution policy and retain a small reserve or reduce its debts. Watch out for such signals.
No matter what, I am holding on to my shares. This toll road is the best thing that happened for those who live in the Eastern Suburbs. One the bottleneck at Hoddles Streets is solved and the Frankston BYPASS to Mordillac Freeway is completed, CEU should come good.
Like Arnold Swag said..... TRUST ME
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