Jenny Wiggins has been analysing Atlas Arteria’s recent acquisition of Skyway highlighting the opinions of various analysts and CEOs.
According to Jenny, analysts have had mixed views on the Skyway acquisition, with many reducing their 12-month target prices on Atlas Arteria’s stock and raising questions about the high price paid by the company. However, our director of outreach Michelle Ho’s view on this matter was different. Using the infraMetrics (EDHECinfra’s analytics platform), she has found that while the Skyway deal was priced “way higher than the mean” (its purchase price was a multiple of 43 times 2022 earnings), cheaper toll roads typically had shorter concessions.
The Skyway’s concession lasts for another 81 years compared to an average of 26 years for other toll roads and assets with longer lives typically have higher valuation ratios, said Michelle Ho, EDHECInfra’s director of investor outreach.
“So was Skyway really overpriced? If you add the high growth expectations of the buyer for the forward cycle, it may not be so silly,” Jenny quoted Ms Ho.
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