Australian Shares Recommendations

Shares in Macquarie Infrastructure Group (MIG) have rallied over 3% since Wednesday, following yesterday’s announcement that MIG, along with Eiffage and MEIF, has been successful in acquiring the French Government’s 70.2% stake in the APRR. The consortium has a combined stake of 74.7%, and will now make a bid for the residual shares at €EUR61 per share, the price paid to the French government.

Shares in St George Bank (SGB) have soared almost 3% this morning after announcing the details of its previously flagged $300m buy-back. The ex-entitlement date is 21 December and tender period close 17 February 2006. Australia’s fifth-biggest commercial bank also reaffirmed its earning forecast of earnings per share (EPS) growth of 10% in both 2006 and 2007.

UK Takeover Panel Disclosure

Macquarie Bank is considering a bid for the London Stock Exchange. As adviser to Euronext, a possible bidder, the UK Takeover Panel requires UBS to disclose that it is acting for Euronext on all research on Macquarie Bank and its listed and unlisted funds

What we like about proposed acquisition of APRR

(1) Mature toll road providing minimal traffic and operational risks; (2) Appears to be valuation and cash flow accretive; (3) Highlights MIG’s ability to identify, secure and win toll road deals; (4) Strategic entry into French tollroad market.

Woodside looks cheap compared to Burlington Resources

Event: ConocoPhillips purchase of Burlington Resources

The ConocoPhillips purchase of Burlington Resources is valued at US$35.7bn. This purchase is thought to be driven mainly for its long-lived, US onshore gas resource (around 80% gas). In comparison, we estimate natural gas is around 75% of Woodside's total resource base, located mainly offshore Western and Northern Australia.

Impact: Implies WPL is valued at less than 40% of Burlington

Shares in Brambles Industries (BIL) have gained more than 7% since announcing in late November that it plans to divest its Cleanaway business, end its dual-listed structure and return at least $2.8bn of excess capital. The company now plans to focus on building its high-growth CHEP and Recall businesses, a move that investors have applauded. Post the recent BIL’s investor presentation, Macquarie Research Equities (MRE) have increased their medium term growth assumptions and outlook for CHEP. MRE reiterate their outperform recommendation with a 12-month price target of $11.00.

Adelaide Bank (ADB) shares continued to trend higher yesterday following the release of an Update Statement, reiterating the banks medium term guidance of double-digit earnings per share (EPS) growth. Macquarie Research Equities (MRE) consider ADB to be the best of the regional banks, offering the highest growth EPS outlook of the regional banks, with the lowest PE (14.4x). MRE currently hold an Outperform recommendation on ADB.

Key points delivered through the Update Statement were as follows: