APA Group plans to invest $460m over the next 18 months to build the Northern Goldfields Interconnect (NGI) connecting the goldfields with the Perth Basin in Western Australia.

The company expects to have an initial 25% of capacity contracted and has identified significant additional demand.

The project, if completed by the end of FY22 would likely benefit from 100% depreciation, boosting returns, Morgan Stanley notes.

APA Group also intend to divest its 50% share of the Mid West Pipeline.

 Equal-weight rating. Industry view is Cautious. Target is $11.38.

Sector: Utilities.

Target price is $11.38.Current Price is $10.53. Difference: $0.85 - (brackets indicate current price is over target). If APA meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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