Qube sale gets tick of approval

Qube’s UBS-led sale of its Moorebank Logistics Park has been met with approval from JP Morgan.

Qube’s UBS-led sale of its Moorebank Logistics Park has been met with approval from JP Morgan, with analysts raising their price target to $3.10 a share for the listed logistics company.

It comes as first round bids for the asset have already been received and interested buyers are expected to be short-listed by the end of this month.

Parties earlier said to be circling were Dexus Property, Charter Hall, Logos, Kohlberg Kravis Roberts, and ESR.

In a note, JP Morgan analyst Ben Brayshaw said Qube would offload about 75 per cent of its interest in the $2bn facility, releasing capital to allow the group to pay off debt and invest in ramping up Moorebank’s production capacity, increasing return on capital employed from 4 to 6 per cent.

The logistics operator has been hit by the coronavirus crisis, with its share price falling from a record high of $3.61 in January by around a third and a withdrawal of its earnings guidance on April 6.

The analyst note said increased investment in the Moorebank facility would see an additional $100m of earnings produced per year over the next decade and earnings per share growth of 7 per cent per annum between 2022 and 2030.

As of December, Qube had a net debt of $1.574bn, with net assets of $2.81bn and $552m of cash and undrawn facilities.

Additional reporting: Lachlan Moffet Gray