NightStalker - you highlighted the problems of ever increasing traffic, increasing number of toll roads and and you think Brisbanites (and yourself) have a problem with paying tolls. Faking - you are of the view that achieving the RCY traffic forecasts or close to it in the time frame i highlighted is achievable.
My experience with Sydney and Melbourne traffic tells me that motorists - particularly business - will not have a problem with paying tolls if the alternative is sitting in traffic.
At this point, the real issue for me/us is whether RCY can come close to achieving its forecast numbers at its opening.
Seems to me - from what Faking is suggesting - that this is very achievable. IMO the share market will re-rate RCY if initial numbers does come in at circa 60,000 a day - in which case IMO its SP should be in the vicinity of 40-50c. I think it would be fair to speculate that if the initial number is circa 60,000 then within 2 to 3 years there is a good chance that it meets its ramped up forecast of 100,000 vehicles. A first year increase of 20% - ala ConnectEast - will have 100,000 within sight by year 3.
Importantly, given its early start and sufficient ramping up budget in hand RCY should be able to meet its cash flow needs. If interest repayments and operating cash flows can be met within even up to 4 years then RCY will be value acretive over a long long time.
Currently, I am of the view that the 60,000 is achievable. In which case, getting to 100,000 within 2 to 3 years is also achievable.
I bought into RCY about this time last year. There is fat on hand and I can afford sit on my shares. I intend to continue holding my shares for now. Should the SP gets to 50c I should probably sell a part of my holding. Should subsequent numbers suggest that 100,000 is within sight in 2-3 years i would have to value my shares based on a likely income distribution profile.
IMO, RCY traded down to its 10-12c lows because of a number of reasons (some related) - GFC, aversion to high debt infrastructure stocks,cancellation of distribution, selling pressure from DRPs, a major sharelder sold all its shares exiting over a year and no institution funds buying interest. Recent buying from 18c looks to me like a professional is accumulating shares.
NighStalker and Faking, your input very much appreciated.
Cheers, Gasbag
RCY Price at posting:
31.0¢ Sentiment: Buy Disclosure: Held
