Transpacific Industries

About the author:

Author name:

By Nathan Lead

Job title:

Senior Analyst

Date posted:

15 January 2014, 8:19 AM

Sectors Covered:

Infrastructure, Utilities, Banks

We have reviewed our valuation of Transpacific Industries (TPI) and continue to be comfortable with our share price target of A$1.30ps.

The key upcoming event is the imminent sale of TPI's NZ operations. The recent rise in the NZDAUD should be beneficial for A$ sale proceeds.

The NZ sale will likely see a significant de-leveraging of TPI's balance sheet, giving it plenty of firepower for future growth investment. It should also allow the dividend to be reinstated.

We're interested to see what impact the new CEO (Robert Boucher) will have on investor confidence. Given his operational background, we're expecting to see operating improvements. We're also hopeful that he will ensure that new debt capacity won't be squandered.

We continue to rate the stock an Add, but recognise that there is material valuation risk within the continuing Australian operations.

More information

If you are interested in finding out more about Transpacific Industries (TPI), please contact your nearest Morgans office.

Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.