ConnectEast

ConnectEast (CEU) is due to go ex-dividend $0.0325 on 10 April. This represents a 2.2% yield. ConnectEast (CEU) shares have a maintained 12 month share price target of $1.55 from analyst Macquarie Research Equities. The major issue for ConnectEast is the timing of the completion of the EastLink road. At this stage MRE forecast it to open in 15 months, i.e. June 2008, with a toll free period and revenue from July 2008. Management remains conservative with the opening date, as being November 2008. The potential remains for the early opening to be brought forward if the weather is reliable and the tolling system development can be accelerated. As per the contract, it is Leightons which must deliver these to ensure an early completion bonus (which provides them with a strong incentive). Of interest in the result is that management is starting to talk about the latent option value in the road. While still in the early stage of Frankston by-pass, East-West corridor and Monash West Gate corridor will all prove attractive and add to the traffic growth certainty in the road.