Raks... this is what I could find from RBS... it actually says...

Raks... this is what I could find from RBS... it actually says "Speculative Buy"...

Rivercity Motorway - Speculative Buy
By Jason Fittler

The stock is currently trading at $0.20, we have a price target of $0.48.

This company was born at a time when financial engineering was the name of the game.

Given the Global Credit Crisis the company has been re-shaped into a more traditional business. In simple terms the company has almost completed construction of the tunnel and should open for business early 2010. From there it is simply down to the traffic numbers.

Key Points are:
1. Construction is complete and fit-out is almost done. Tolling systems complete.
2. If the road opens early RCY will benefit from early traffic revenue and interest savings.
3. Traffic in the ramp-up stages of RCY may be affected by construction on the Airport Link, which is due to open mid-2012. Once Airport Link opens this will benefit RCY by provide a direct passageway from Brisbane's South all the way to the airport.
4. Traffic for RCY will be affected by the Gateway Duplication and Hale Street link but this was already taken into account in PDS forecasts.
5. RCY will be marketing the toll-road aggressively leading up to its opening using a range of initiatives. It has large cash reserves.

Given current banking covenant in place the company is not expecting to pay any dividends until 2012, although the company has cash reserves there is still considerable borrowing to be repaid.

This is a speculative buy, we are looking for capital growth on the stock which will all hinge on the traffic numbers. Given congestion in the Brisbane City I would expect to see strong demand for this new road.

PS. For more information on Rivercity Motorway please call us on 07 4771 4577.