Transurban's Distribution Growth Challenged by Free Cash Constraint
Dow Jones
Oct 06
2231 GMT [Dow Jones]--Morgans junks expectations of distribution growth by Transurban in the wake of its A$4.5 billion acquisition of Canada Pension Plan Investment Board's stake in companies that own the Westlink M7, NorthConnex and WestConnex highways in Sydney. Analyst Nathan Lead's estimate of free cash in FY28-FY29 is some 8-10% below Transurban's guidance of a FY27 distribution of A$0.72/share. "We no longer assume growth in distribution per share but instead hold our distribution forecast flat at the FY27 guidance," Morgans says. "At current prices, this implies a cash yield of 5.5%." Morgans has a trim call on Transurban.
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