Earnings certainty and tailwinds for DUET
DUET’s assets operate as part of the overall transmission and distributions of gas and electricity across the nation. The provision of such vital services is usually monopolistic in nature and highly regulated to ensure prompt delivery of service to end-customers. The prized asset of DUET is the Dampier Bunbury Pipeline, which accounts for around 41% of EBITDA. It is the major pipeline transporting gas from the North-West gas shelf to the industrial areas around Perth. At present, Alcoa accounts for around 40% of gas volumes on DBP. Whilst there is some risk that gas demand from Alcoa may soften, there is further demand-pull for gas volumes from power generation for the WA retail market and usage in industrial facilities in WA. The outlook for gas demand in WA is encouraging, with WAS gas demand forecasted to grow approximately 3.6% p.a. until 2020. This bodes extremely well for the DBP as it is the only pipeline to transport gas with little by-pass risk. (VIEW LINK)
Altair Asset Management (Altair) is a high conviction, active Australian equities manager whose investment philosophy is based on understanding the drivers and impact of change. Altair applies macro thematic research to uncover trends which are...
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