SP Ausnet Post Alinta: What Now?

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This story features SPARC TECHNOLOGIES LIMITED.
For more info SHARE ANALYSIS: SPN

By Rudi Filapek-Vandyck

SP Ausnet ((SPN)) has pulled the plug on the proposed acquisition of the Alinta assets and businesses from its majority security holder Singapore Power International. This transaction was widely regarded as a negative one for SPN shareholders and it should therefore be no surprise the stock opened more than 6.7% higher at $1.27 this morning.

As most securities analysts will tell you they have a valuation of closer to $1.40 for the stock, the main question on traders’ and punters’ mind will be: are SP Ausnet securities now poised for a quick disappearance of this discount?

Some of our sources in the market believe the answer  to this question is probably negative as SP Ausnet’s earnings forecast are currently under threat, especially current market expectations for fiscal 2009.

However, it may just be that the company’s future will be determined by another issue: what will the majority shareholder do now? There has been speculation that a full ownership of the assets is but a logical step for Singapore Power, but… when?

One of the questions that will continue to weigh on market sentiment for the stock (in the absence of a full takeover bid) is what growth options are left for the company as value accretive transactions in the current debt market environment are considered as difficult?

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