Transurban's Traffic Growth Is Slowing Faster Than Expected; Trimming FVE to AUD 11

Traffic growth was fairly soft in most markets in the September quarter 2018. Slowing growth appears to be more than just related to roadworks and other one-offs. Some assets are maturing faster than expected while others are likely impacted by cost of living pressures, leading us to downgrade our medium-term growth expectations modestly. We trim our fair value estimate 4% to AUD 11. At the current price, the stock is fairly valued. The firm's wide moat rating remains intact. We also adjust forecasts to consolidate the M5 from fiscal 2019 as Transurban is now the majority owner, though this doesn’t impact our valuation. The M5 was previously equity accounted.