Question 1: Do you think the Transurban (TCL) share purchase plan is good value buy for current shareholders?
Answer: Transurban is currently trading around $14.93, so on paper, buying it at a maximum of $14.70 looks like a good deal. In fact, you will pay a maximum of $14.70 or 2% below the ASX trading price during the last week of August. Applications close 30 August and there is probably a good chance it will be oversubscribed and subject to a scale back.
Is it a good long term investment? I am a huge fan of Transurban, but around $14.70, I am sensing it to be a little expensive. The forecast distribution of 62 cents next puts it on a yield of 4.2%. With 4c likely to be franked, it grosses up to 4.3% — interesting, pretty secure, but not particularly compelling. I also think there is a little more risk around ongoing traffic growth – so that the rate of distribution growth may slow from high single digit to low single digit.