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Professional’s Pick – Macquarie Atlas Group

Portfolio manager for Equity Trustees
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How long have you held the stock?

We have held Macquarie Atlas Roads (MQA) in an overweight portfolio position for nearly two years, and have mentioned it before in this column (in February 2015) but thought it was worth revisiting, as a few things have changed.

What do you like about it?

We like it because it owns strategic stakes in a couple of “the world’s best” infrastructure assets. Both are toll roads: one is in France and the other is in the USA. Both have long term toll concessions, with great growth potential in the traffic they carry, and the ability to increase tolls they charge, above the rate of inflation.

Where do you see the value?

We see value in its:

  • relatively attractive investment multiples
  • defensive style assets
  • strategic positioning of its assets
  • attractive distribution yield
  • near term growth of over 10% pa over the next few years.

How is it better than its competitors?

We also like it because they don’t really have any competition. They are essentially monopoly assets, which are great for investors to own. They only compete with older more congested, slower, less direct roads.

What do you like about its management?

Management is very focused on what they do, and they do it well. Currently the management teams are external to MQA, and there’s a chance the company will restructure and internalise the management team, which we would see as a further positive for the stock.

What is your target price? At what point would you sell it?

Our target price has lifted significantly, due to the traffic travelling on these roads being substantially higher in the last 12 months. Currently we value MQA at A$5.50.

How much has it added (subtracted) to your overall portfolio over the last 12 months?

MQA has significantly contributed to our portfolio over the last 12 months adding 51 basis points.

Macquarie Atlas Roads (MQA)

20160519-mqa.axSource: Yahoo!7 Finance, 19 May 2016
Hugh Cameron is a portfolio manager for Equity Trustees.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.

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