MIG 0.00% 4.4¢ a.c.n. 059 457 279 limited


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    MIG: Shares Rally On Strong Outlook

    Shares in Macquarie Infrastructure Group (MIG) have made strong gains in recent sessions due to a fall in 10-year bond yields and strong traffic growth. MIG shares have also been buoyed by expectations that the UK government will announce plans to build a toll road likely to feed traffic onto one of MIG’s largest assets, the M6.

    Yesterday MIG released strong June traffic numbers which supports Macquarie Research Equities (MRE) positive outlook. Compound growth of 3.2% p.a. over the last six months on key asset, Highway 407, following the recent toll hike demonstrate that the road can sustain on-going increases.

    MRE believe that the catalyst for MIG’s share price in the next six-months remains winning arbitration over the 407. The resolution of the dispute with the Ontario government will see a massive de-risking of MIG’s core asset, H407, as the ability for H407 to raise prices without government approval will be externally established.

    Over the past month the 10-year bond rate has dropped about 20 basis points. This is good news for highly geared infrastructure stocks such as MIG as it reduces the cost of borrowing, leading to the generation of more cash.

    MRE maintain a short and long-term Outperform recommendation and a 12-month share price target of $4.33.

    Investors and traders looking for short to medium-term leveraged exposure to the MIG share price should consider Macquarie Instalments for a higher risk, higher return alternative to direct share investment.

    Long term, more conservative investors looking for a simple, "set and forget" investment should consider the Self Funding Instalments over MIG, MIGSMS and MIGSMT. SFI's are moderately geared, have no annual resets and a maturity date in up to five years.

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