Big Mac report - traffic, revenue, profits stable, valuations lowered

A much anticipated Macquarie Infrastructure Group (MIG) report shows the big private toll road concessionaire with rather stable traffic, revenue and profits, but as anticipated big writedowns in the valuation of their toll properties. Nine toll property shares are downvalued in total by 28% in the first six months of this year (31 Dec to 30 Jun) and by 40% since 30 Jun last year. In $A the MIG portfolio has gone from a total valuation of A$8.57b to A$7.08b to A$5.09b.

Actually A$0.31b of that last writedown was recovered in a sale of a major share in Sydney Westlink M7 so the true downvaluation was 17% mid-2008 to end-2008, 24% in the first six months of this year and 37% for the whole fiscal year.

Their good news is on operating accounts where traffic, revenue and profits (EBITDA) were more or less stable in the financial year to end-June compared to the previous financial year.

Operating revenue, mostly tolls, in the financial year to mid-2009 were A$1.23b v A$1.22b in FY2008, a rise of 0.7%. Operating expenses were held to A$344m v A$341m so the net or EBIDTA hardly moved from A$877m to A$882m.

Interest expense was up a bit more from A$445m to A$474m, but taxes at A$50m were down from A$78m.

By far the biggest write-down was in M6 Toll in England. It is now valued at A$412m vs $1.20b six months ago and $2.19b a year ago. (A$1.00 = US$0.83c)

In the US South Bay Expressway in California is totally written off now - A$0.00 v A$12m end-08 and A$133m mid-2008.

MIG's share in Indiana Toll Road is now put at a mere A$98m v A$189m end-2008 and A$344m mid-2008.

Chicago Skyway's trajectory has been similar if less steep A$236m, A$186m, A$148m now.

Dulles Greenway  has gone A$397m, A$346m, A$343m.

MIG's share in APRR in France has been seriously downvalued too A$982m, A$767m, A$448m.

407ETR remains bedrock of MIG value

407ETR remains the bedrock on which MIG rests and valued at A$3.28b the one Toronto Ont pike is now 64% of the total value of MIG holdings (A$5.09b). 407ETR has about the same valuation as a year ago but then it was only 39% of the total MIG valuation.

Excluding 407ETR MIG's portfolio of toll concessions went from A$5.27b to A$1.81b, in the past year, a loss of two-thirds (66%). However the group sold a major share in Sydney Westlink M7 for A$311m, so the comparable for that last number is A$2.12b and the drop on a year ago ex-407ETR is 60%.

MIG seems to be in a solid financial situation with cash of A$670m on hand, successful refinancings, some sales at close to valuation, and rather little debt maturing next year.

A presentation suggested that there are unlikely to be major new asset sales or divestments because market conditions are unlikely to see strong bids for any roads put up for sale.

MIG is under no pressure to raise cash so for now sales are unlikely.

http://www.macquarie.com.au/au/mig/index.html

TOLLROADSnews 2009-08-19