Macquarie Atlas Roads Group

Internalising Management:Global infrastructure developer, operator and investor, Macquarie Atlas Roads Group (ASX: MQA) witnessed a stock price rise of 4.6% on April 09, 2018 after the company made an agreement with Macquarie on the terms of the internalisation of MQA’s management. There will be no consideration paid to Macquarie for terminating investment management agreements, and Macquarie will remain as MQA’s manager for a further 12 months from May 15. During this period, the base management fees of 0.85% of MQA’s market value will be paid to Macquarie, and Macquarie will provide transition services for further six months after that, for a fee of $750,000 per month. After the process is complete, MQA will be rebranded as Atlas Arteria and trade under the ticker code "ALX". Additionally, James Hooke, MQA's current chief executive, will leave his post once MQA is internalised. An Explanatory Memorandum outlining the Proposal and associated internalisation resolutions to be considered by shareholders will be distributed by 13 April 2018. Macquarie will continue to act as manager of MQA’s interest in APRR through the MAF Group and will be entitled to receive fees for this service (on the terms previously disclosed to the market) from 16 May 2019. On the other hand, the group has delivered 30% as total securityholder return in 2017 and its distribution per security has been up 11%. The group has increased distribution guidance for 2018 to 24.0 cps, which is a 20% increase on 2017 and its first half 2018 distribution of 12.0 cps was declared in March. Meanwhile, MQA stock has fallen 10.32% in three months as on April 06, 2018 and is trading at a low P/E. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $ 5.910.
 

Distribution Trend (Source: Company Reports)
 

Metcash Limited

Key IGA franchisees threatening to oppose company’s plan:Metcash Limited’s (ASX: MTS) stock edged lower by 0.64% on April 09, 2018 after release of a media report that highlighted about key IGA franchisees threatening to oppose the company’s plans to reduce the product range to manage profit and productivity. Some franchisees believe that the company will get benefit at the expense of IGA supermarkets that are under the Metcash umbrella. On the other hand, MTS has appointed Scott Marshall as Chief Executive of the Supermarkets & Convenience pillar after the resignation of Steven Cain. Further, Rod Pritchard, General Manager Merchandise for the Liquor pillar, has been appointed as interim Chief Executive Liquor. Moreover, MTS expects the Liquor earnings to be seasonally weighted to the second half of the FY 18. There is some uncertainty over the market impact of the Container Deposit Scheme, however, the benefits from the Working Smarter program are expected to mitigate the impact of these difficult market conditions. In Hardware, the positive sales momentum is expected to continue into 2H18. Meanwhile, MTS stock has fallen 1.3% in last one month as on April 06, 2018. Given the prevailing conditions, we put an “Expensive” recommendation on the stock at the current price of $ 3.120.
 

1H 18 Financial Performance (Source: Company Reports)

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