Morgans bullish on Dalrymple and tips big spike in revenue

Morgans has started coverage on the Dalrymple Bay Infrastructure with an add recommendation despite a share price plunge since it listed late last year.

Jan 14, 2021, updated Jan 14, 2021
The Dalrymple Bay Coal Terminal.. Image; Supplied

The Dalrymple Bay Coal Terminal.. Image; Supplied

Morgans analyst Nathan Lead said funds from operations at the coal terminal, near Mackay, were likely to spike by as much as 50 per cent as the company renegotiates its debt and benefits from lower interest rates.

He has a $2.50 price target on the stock based on a positive change in its regulation.

The Queensland Government, through QIC, took a 9.9 per cent stake in the company at its recent float, but the shares have fallen from the listing price of $2.57 to almost $2. However, the stock jumped to $2.12 this morning.

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Lead said the lower share compared with its listing price would benefit the company’s yield which was now at the top of the list of ASX industrials.

He has also tipped that company would benefit from reduced regulation.

DBI currently is constrained by regulatory regime in which the Queensland Competition Authority determines how much it can charge, but this could change to a “light-handed” approach, which would allow the company to negotiate directly with customers.

He said there was also a judicial review under way that could result in QCA being removed from the process entirely.

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