Following the release of the final report from the NSW Independent Toll Review (concession negotiations are next), Morgan Stanley believes NSW sovereign risk remains low.

The report recommends the NSW Government negotiate with concessionaires to reach in-principle agreement by the end of 2024, for the adoption of uniform distance-based network tolling across NSW by 2027.

Recommendation No 5, if adopted, would transfer traffic risk to the government, but would magnify rate and duration risk to Transurban Group investors, cautions the broker.

This recommendation suggests potential for a net present value revenue (NPVR) approach, where concessions expire once the road achieves its base case revenue NPV, explain the analysts.

Target $13.06. Equal Weight. Industry View: Cautious.

Sector: Transportation.

Target price is $13.06.Current Price is $12.94. Difference: $0.12 - (brackets indicate current price is over target). If TCL meets the Morgan Stanley target it will return approximately 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

© 2024 Acquisdata Pty Ltd., source FN Arena