CEU - Connect East Group

[sptrawler]

CEU is one of several disappointing toll way floats, Lane Cove tunnel, Rivercity Motorway smack of the same problem. Dodgy projections in the traffic flows pre float and then terrible results post float. I think it is going to be extremely difficult to get subscribers to future toll way floats unless there is a big turnaround in the above mentioned companies. CEU is holding its price but still a big loss for prospectus investors, Rivercity $1.00 shares look pretty sick at 0.03c the only winner is the Queensland government, they got the tunnel and the shareholders got the pineapple. Unless they put some money in to keep it afloat they will never get a public/private float up again. Lets not forget Brisconnect what a debarcle that is and its not finished yet.
The only sensible thing to do is as you say buy shares for you grand kids, but why would you buy in the above, if they go belly up the grand kids get the pineapple too. There has to be better long term value than the above mentioned, if there isn't we are in a lot of trouble.

 

[Sean K]

Long term these toll roads will be absolute cash cows. There are no additional public transport plans out to the east that I know of, and we will not be beemed to work any time soon. The eastern burbs will continue to expand, cars will become cheaper to run (electric), so the only real long term risk imo is takeover.

 

[sptrawler]

I agree Kennas with your comments that these toll ways are cash cows and I also believe they are more important with electric vehicles(nothing drains batteries more than stop start operation). However the huge debt obligation has to be covered and there is only two ways either more traffic or higher tolls and at the moment neither is happening and that doesn't leave much for the shareholder in the way of dividends. What has to happen is the governments are going to have to pump some money in or they will all become Lane Cove tunnels where they are taken over at a bargain basement price. Shareholders loose again.

 

[Greenvalley2006]

I was wondering if any posters have had a chance to eyeball the CEU 2010 Annual Report, and the August 2010 Traffic and Revenue report, the latter showing a 15.8% increase in revenue between the months of Aug 2009 and Aug 2010.

The analyst’s views seem polarised, with for example, Roger Montgomery rating CEU a C4 ie one rung up from the bottom: (Eureka Report, ValueLine: Infrastructure, 29/09/10), whilst Mike Hawkins has a positive recommendation on the stock: “ConnectEast is a different investment proposition, with its main asset still in ramp-up phase. However, the 2009-10 result was sound and its strategic attraction to Transurban will one day be confirmed. Our valuation for ConnectEast is about 50 ¢.” (Eureka Report, You Need Yield, 08/09/10).

I personally use Eastlink, and see estates and industry being planned and built along it and in the south east, and I can see that the Peninsula Link will further complement its patronage, so I have confidence per se that Eastlink will carry more and more traffic.

What I do not have enough experience in is measuring whether the traffic volume increases will generate revenue quickly enough to eat away at CEU’s debt, to then pay high divs. I think this probably lies in the annual report, and maybe where to the interest rates are heading. I am also unsure as to when Eastlink will revert back to Vic Gov ownership.

Any comments are appreciated.

I hold a small CEU parcel

Cheers

THIS IS NOT ADVICE!

 

[Greenvalley2006]

A question for the Wiser Heads, now that the situation has changed with regard to CEU.

Horizon Roads / CP2, CEU's biggest holder has made an offer of 55c for the remaining shares, to be approved by the other shareholders.
Before the offer, which was made public on Friday 22/07/11, SP was approx 44c to 45c. After the offer buys and sells were approx 54c to 54.5c

This only leaves 1c to be made by the buyers if the offer is accepted, October. Seems like not much return, could do practically same at a bank with no risk that offer is voted down and status quo.

Is this a case of the market pricing in either:

1) A rejection of the offer by holders, with Horizon Roads / CP2 then having to up the original bid

or

2) A higher bid by another entity being a possibility

or

3) Something else I am not seeing

Further, in my inexperience, I am curious why the Course of Sales on Commsec shows no trades before 11.00 am on the day of the announcement, without a trading halt being in place that I can see.
From what I can see these were the first trades:
11:00:00 AM 0.540 3,687 1,990.98 XT
11:00:00 AM 0.540 213 115.02

Any and all help always appreciated

Cheers all

I HAVE NO IDEA. DO NOT DO IT.

 

[skc]

A question for the Wiser Heads, now that the situation has changed with regard to CEU.

Horizon Roads / CP2, CEU's biggest holder has made an offer of 55c for the remaining shares, to be approved by the other shareholders.
Before the offer, which was made public on Friday 22/07/11, SP was approx 44c to 45c. After the offer buys and sells were approx 54c to 54.5c

This only leaves 1c to be made by the buyers if the offer is accepted, October. Seems like not much return, could do practically same at a bank with no risk that offer is voted down and status quo.

Is this a case of the market pricing in either:

1) A rejection of the offer by holders, with Horizon Roads / CP2 then having to up the original bid

or

2) A higher bid by another entity being a possibility

or

3) Something else I am not seeing

Further, in my inexperience, I am curious why the Course of Sales on Commsec shows no trades before 11.00 am on the day of the announcement, without a trading halt being in place that I can see.
From what I can see these were the first trades:
11:00:00 AM 0.540 3,687 1,990.98 XT
11:00:00 AM 0.540 213 115.02

Any and all help always appreciated

Cheers all

I HAVE NO IDEA. DO NOT DO IT.

When there is a takeover situation announced before the market open, the share's openning is delayed to 11am as standard practice. This allows an orderly market with pre-market starting at 10:50am.

With CEU now at 54c against 55c bid, the gap is indicating very much a done deal (as you said, the value of the gap is no more than interest in the bank). Transurban has been flagged as a potential counter bidder but based on its share price going up 2.5% on Friday it seems like the market isn't seeing that at the moment.

If the market is confidently expecting a higher bid, you will see CEU trading higher than the bid price (see SDL or QML for recent examples). That could still happen Monday for all we know.

Obvisouly if you sell on market now you will be paying brokerage and forgoing the benefits if a higher bid comes along, in exchange of certainty of money in the bank. You should also pay attention to any tax implications (e.g. if holding another month qualifies you for 12-month discounted CGT).

 

[Greenvalley2006]

Thank you SKC!!

Great answer to my learning.

When you say;
"When there is a takeover situation announced before the market open, the share's openning is delayed to 11am as standard practice. This allows an orderly market with pre-market starting at 10:50am."

Is this always? ie part of AXS rules, and will always happen in a similar situation?

Many thanks

 

[skc]

Thank you SKC!!

Great answer to my learning.

When you say;
"When there is a takeover situation announced before the market open, the share's openning is delayed to 11am as standard practice. This allows an orderly market with pre-market starting at 10:50am."

Is this always? ie part of AXS rules, and will always happen in a similar situation?

Many thanks

It's a 50 minute rule. So if a takeover is announced before the open, it's 10:50 for pre-market. If it's announced at 1:30pm, then it's 2:40pm pre-market.

http://www.asx.com.au/resources/takeovers_schemes.htm

 

[JTLP]

So the deal looks all but done...standard procedures in place before the shares are mopped up.

So why are the shares languishing at the 49 cent mark with a 55 cent offer?

Arbitrage play here? Thoughts?

 

[skc]

So the deal looks all but done...standard procedures in place before the shares are mopped up.

So why are the shares languishing at the 49 cent mark with a 55 cent offer?

Arbitrage play here? Thoughts?

Not all is well.

http://www.smh.com.au/business/connecteast-proposal-may-end-in-car-crash-20110915-1kbsj.html