Gasbag, I think a linear ramp up of traffic is extremely unlikely. Past toll roads get 60% of traffic in month 1, 90% in month 6 and 100% at 18 months. However, for simplifying analysis I can live with it. However, I think the numbers you have come up with are a best case scenario!
If we use your numbers then the valuations you have given seem to be based on dividend yield. I think Discounted Cash Flow would be a much sensibler method to value the stock. This is because as time goes on toll road revenue rises exponentially because of inflation linked increases in tolls but also increases in traffic. If we get 100000 vehicles in two years time I think insto's will value this stock at $4.00+, not $0.83 to $1.00
Rather than your 60000 vehicles in month 1, I'm looking for 70% of that or 42000 or more vehicles for this to be a goer. If we get 60000 this stock will soar....
RCY Price at posting:
28.0¢ Sentiment: LT Buy Disclosure: Held
