Morgan Stanley considers the proposed changes to the gas pipeline regulation a manageable headwind for APA Group. The changes are expected to put pressure on contract renewals but not fundamentally change the investment outlook.
Australian energy ministers have agreed the form of regulation will be determined by a regulator with unchanged exemptions from greenfield projects for up to 15 years.
he stronger form regulation will be the negotiate/arbitrage model within the existing full regulation while the lighter form will be based on a strengthened part 23. Non exempt pipelines will be required to disclose summary financials.
Equal-weight rating. Industry view is Cautious. Target is $9.65.
Target price is $9.65.Current Price is $10.00. Difference: ($0.35) - (brackets indicate current price is over target). If APA meets the Morgan Stanley target it will return approximately -4% (excluding dividends, fees and charges - negative figures indicate an expected loss).
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