Atlas Arteria: French Government Targets Toll Roads With More Taxes

We downgraded our fair value estimate for narrow-moat-rated Atlas Arteria by 3% in August to incorporate a mooted increase in nonincome tax at core asset APRR in France. That tax has now been proposed and we expect will be approved by French Parliament in late 2023. It is set at 4.6% of revenue above EUR 120 million, which we estimate will increase APRR’s nonincome taxes by 42% in 2024, sufficiently close to our prior assumption of 50%. We maintain our AUD 5.85 per security fair value estimate, which includes a AUD 0.50 takeover premium given likely interest from IFM Investors.