Sealink Travel has entered a joint venture with larger London bus companies for its West London operations and will hold a 12.5% stake in the entity, RDLT, retaining ownership of the depot that will be sub-leased to RDLT.
UBS believes the joint venture will help address a lack of scale and revenue growth for Sealink Travel, improving the commerciality of its operations.
Given the shared operating benefits of the joint venture UBS expects cash flow will roughly break even upon completion of the deal. Buy rating and $10.50 target maintained.
Sector: Consumer Services.
Target price is $10.50.Current Price is $8.89. Difference: $1.61 - (brackets indicate current price is over target). If SLK meets the UBS target it will return approximately 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).
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