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It is not China related infrastructure investment trust yet with a lot of debt burden so within this year till next year I 'll give it a miss.
nickyng ( Date: 03-Sep-2009 15:17) Posted:
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I POSTED THIS ON CHANNELNEWASIA FORUM HAHA -
Current Infastructure Business Sector Outlook
Infrastructure businesses have long life-spans and a regular cashflow. They often have very large debts which are hedged against their regular cashflow. They pay large dividends to their shareholders based on the net income derived from –> cashflow – interest income. Currently, most infrastructure companies are still performing well in terms of operating cash flow and profits. The recession has not hampered their cash-generating ability in any significant way. The problem lies with their debts and refinancing issues in light of the credit crunch. Currently virtually all banks in Europe are unwilling to lend out large sums of money to any form of businesses no matter how high they are willing to pay for the interest. As a result, even though refinancing is far away, they cannot expect to get another loan from their lender. So they are left with 3 options – a) ignore the problem till refinancing occurs in 3-5 years time, b) solve the problem immediately with capital injection via a rights issue or c) use all free cashflow to pay down the debt (zero dividends). Most businesses are now trending towards the third option. So we are now left with good companies with excellent cashflow but poor dividends for the next 3 years. Asian-wise, the credit crunch has not affected Asian companies. There is much liquidity in Taiwan and China.
MIIF Policy of Debt
MIIF CEO John Stuart believes that since MIIF is an equity based company, she shouldn’t be using debt to pay dividends or buy assets. A leveraged fund is not what MIIF intends to be. As such, MIIF intends to reduce her corporate debts to near zero by 2011. Mr Stuart says the net debt level of 20mil will slowly be reduced till zero at 2011. The credit facilities will only be used as bridging loans or to facilitate the payment of dividends due to the timing differences of some distributions. These sorts of debts will be repaid within the year itself. Mr Stuart argues that being an un-leveraged fund, MIIF will be very attractive to investors and it might prop up the share price. Moreover Mr Stuart doesn’t believe in rights issues unless it is for growth. But even then, it shouldn’t be used needlessly since it dilutes shareholders value
MIIF Assets
Arqiva – Here is the biggest surprise for our largest asset. Arqiva holds around 2.7bil of debt and it intends to draw a further 500mil for its capex. John Stuart says this debt is unsustainable in the current economic climate. Due to a change of shareholders, the decision to pay a dividend will be made in Sept 09 after the board meeting. The board will decide on which of the 3 options will it take to reduce debts. Since Arqiva revenue and profit is growing, Mr Stuart believes that Arqiva will elect the third option and there will no distributions for the next 3 years. Currently, if there is an offer to buy Arqiva, Mr Stuart will recommend a sale to MIIF shareholders during the vote. We must wait for the Sept meeting before its position will be clear. Mr Stuart says the new largest shareholder Canadian Pension Fund has very deep pockets and was only interest in MCG for their stake in Arqiva. If they decide to pay down Arqiva debts in exchange for shares, this problem might be solved.
MEIF – Same story as Arqiva. Some of her assets will not be distributing income in the short term. As a result, her distribution to MIIF will be sharply reduced for this year. Only Thames had managed to get refinancing from her lenders. Mr Stuart said that MIIF was in the process of selling MEIF (and using the funds to buy Asian assets) in June 08 but the credit crunch derailed those plans. On another note, due to MIIF investment in MEIF, there is a 3 million dollar rebate on the management fees. If the share price dips to 15cents, the Management will end up paying shareholders since its fees will be less than the rebate!
Maoli Wind – MIIF smallest investment. Mr Stuart treats this asset with much derision and has more or less written it off. It was a mistake since its revenue was no where close to its estimates. The wind isn’t very strong!
HNE Expressway – Mr Stuart says this asset will start playing a large role in our income over the next few years. The opening of phase 3 will increase traffic by 10% a year. He expects the yield to increase over the next few years. He forecast that it will alone contribute to 1cent/share dividend for 2H 2009. It will rise in the next few years. In short term, the drop in economic activity in Southern China will affect it but not too significantly. It has a very bright future.
CXP – This asset would have similar distribution as the previous year if not for the one off legal expenses of 24mil RMB. It will be slightly lower. Its 2Q performance was very good. One of the better performing ports in China.
CAC – The credit crunch has not affected Canada too badly. Debt is more expensive but it still exists. MIIF made a further 10 million dollar investment in the 1H 09. He expects no significant drop in its distribution
TBC – MIIF star performer. Distribution will be similar as the previous year. Its operating cashflow has exceeded expectations with new products in the market.
MIIF Valuation of Assets
NAV remained constant this year at 87cents. Mr Stuart believes it may have reached bottom and should rise in the coming quarters. The drop in valuation was due to the credit crunch effects on the distributing cashflow of her assets. MIIF uses a discounted cashflow analysis over a stretch of 20-30 years with a discount of between 13-19% (depending on the level of risk). After the Manager decides on the valuation, it presents it to the directors (4/5 are independent). After which, it is presented to PriceWaterCoopers for their input. If there is a discrepancy, there will be a meeting and the Board will reflect the changes in necessary. MIIF also base it on real world asset sales (excluding fire sales). Generally there is very little discrepancy. John Stuart believes the stock price is extremely under-valued.
MIIF Dividend Policy
John Stuart says the current dividend of approx 20mil is sustainable in light of the credit crunch. He made light of the situation by stating that 6 months ago he said 3 cents dividends was sustainable and as such he has lost his credibility. This drew a lot of laughs.
For the 1H =
Income – 28mil
Dividends – 20mil
Investment made – 10mil
Mr Stuart says the days of 4 cents dividends every 6 months are gone until the credit crunch is over. Generally, some of the dividends were derived from one off special dividends from her assets which were regular in the boom times. Due to the economic climate, this 4 cents dividend is unsustainable due to the lack of special dividends and decreased distribution in arqiva and meif. Instead, distributions from HNE, CAC and TBC will form the new core for MIIF dividends. Including the 27 million dollars used to pay debts, for the 1H 09, 1.5 cents was sustainable. He did not forecast a 2H performance but generally it wouldn’t be less than 1.5 cents. He did expect HNE to contribute minimum of 1 cent dividend alone.
As I was eating, some investors were stating that an annualized dividend of 3 cents, MIIF has a yield of 9% which beats FD. Moreover since, the share price is so low, it can’t go down much so they plan to bargain hunt tmr.
Share Price
Mr Stuart believes that the current share price is no where near the Management valuation. This is the reason why the Scrip Dividend is not in place. Currently, the board is looking into all options to narrow the gap. He believes that the price will appreciate with the market but for it to hit back to its old price, its needs a major event to spark it off. He cannot give details as its share-price sensitive. But when queried for examples, he mentioned a sale of its assets with good valuation would drive up the price. The cash generated would be returned back to the shareholders or used to acquire a new asset or do shares buy-back.
All in all, Im still vested. It still has a decent yield. Most of the investors expected a 2 cent dividend so i dont expect a drastic drop. Management seems confident of its asian assets
wah! wat happ? this MIIF juz taken steriod har?? cheong till 35.5cts with almost 5m in vol ?!?! wow! :D
looks like a tough tussle betn 33.5 and 34cts for this burger siah! :P wondering if it will break 34cts today..since this is the most laggard among those REITs play :D
today lelong at 34cts !! wow !! :P in my opinion this REIT is the few laggard it's other REIT peer :D
Wow lelong at 33cts liao !! :D
I wrote a summary of what happened in the MIIF 1H briefing carried out by John Stuart last week in the CNA Forums.
Arqiva will most likely not be giving any distributions for the next 3 years.
HNE should be giving 1cent worth of distribution to our dividends. CXP, TBC and CAC will also be distributing. I anticipate a 2 cent dividend for 2H.
Baring any surprises to the downside, 2H div should be more than 1H cos CXP, HNE and Miaoli only pays out div in 2H..
grandmaster89 ( Date: 14-Aug-2009 23:02) Posted:
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MIMAL is just the manager. Hmm but Im more worried about Arqiva. Looks like we can only expect an annual dividend of around 3ct. At current price of 0.365, its an attractive yield of 9%. Moreover NAV is at 0.87 ahah.
For sharing. Those aim for long term and like to tap on global economy recovery should pay some attention in this counters. OF course, don't expect to surge overnight, but it should well performed in long run unless Macquire bankrupt!!
I think the extracting just a portion of the Portfolio Outlook may not give the full picture of the issues facing MIIF. Am now attaching the commentary in its entirety for investors to make their own judgement.
PORTFOLIO OUTLOOK
While global economic and debt market conditions are anticipated to remain challenging during 2009, it is
important to note that all borrowings held by MIIF’s underlying businesses are non-recourse to MIIF and
have substantial remaining contractual terms of between two and 14 years, with the earliest maturing in
2011.
MIIF has a cautious view regarding future developments in the debt market over the short to medium
term. While MIIF’s businesses do not face any major contractual refinancing, the availability of debt in the
current markets has been reduced. Accordingly, MIIF will continue to maintain a conservative approach to
capital management and is focused on ensuring its businesses are appropriately placed for the current
environment. This may include active management of debt facilities and potential debt reductions. In this
event, receipts from the underlying business would be reduced with a commensurate effect on MIIF’s
ability to pay dividends to shareholders.
With respect to global economic activity, MIIF’s investments in TBC, CAC and Miaoli Wind are likely to
remain relatively unaffected. However, revenues from MIIF’s remaining investments, particularly those in
China and transportation assets in Europe, are being impacted by the economic slowdown. MIIF will
continue to focus on ensuring that the cost bases and revenue optimising initiatives are appropriate for
the prevailing operating environment.
nickyng ( Date: 14-May-2009 14:28) Posted:
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haha...well sideline and see the drama unfold loh :D
Macquarie International Infrastructure Trust (M41.SG) down 9.1% at 6-session low of S$0.35 on concerns over potential dividend cut following 1Q09 guidance. In light of tight credit conditions, company says it'll maintain conservative approach to capital management, possibly pare debt levels despite no major refinancing obligations. Adds investment income for rest of 2009 may be hurt by high debt levels of several businesses. Guidance follows release of 1Q09 results - net profit S$11.7 million higher on-year at S$23.4 million due to increased investment income from Canadian Aged Care, Taiwan Broadband Communications businesses, as well as FX gains, lower operating costs. "The first reaction to the quarterly result is to respond to the implied dividend cut," says Macquarie Research; "our view is the manager is motivated to resolve the issues, with the most plausible outcome being some level of asset realization in the coming 2-3 quarters." Support tipped at 20-day moving average of around S$0.34. (FKH)
kingster ( Date: 14-May-2009 16:32) Posted:
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their debt actually increased alot this quarter! and they want to be debt free by end of yr? that means less money for us already in terms of div... not vested already... not worth the risk... want to reduce debt and yet 1st Q debt increase so much... rubbish..
haha...read from report announced yesterday 13-May, NAV is 88cts...now trading at 35cts ?!?! wow..and the management claim they wanna do somethg abt it siah...time to accumulate ?
http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_B82178FD2036EC0D482575B4004D5D9F/$file/MIIFQ12009ResultsReleaseFINAL.pdf?openelement
Portfolio and capital management
The Board believes that the underlying value of MIIF’s investments is not reflected in
MIIF’s share price, which remains at a significant discount to directors’ valuations. The
Board is committed to addressing MIIF’s share price underperformance and will continue
to explore a range of options to restore and enhance shareholder value.
MIIF has a strong balance sheet and capital position with no capital raisings required at
this time. Significantly, MIIF continues to have low corporate-level debt, which is
anticipated to be substantially reduced in the short-term.
pathetic stock
results out... 3cts dividend as guided... :)
you are still not late to notice....
this stock is really lousy... think capital might still be throwing their remaining shares... no one is proping this guy up... not even the 3cts dividend is helping...
Lucky i threw at 60+ cents....After analyse wat the chairman said in the EGM when they sold Tanquid blabla properly, i conclude that the co. did not choose the right person, nor the independent directors know wat to do. Did not even open a single mouth.
Capital Group stake fell below 5%...so no more substantial shareholder.....i.e. no need to report sale of MIIF shares anymore.
As of 8 Jan 09, they've got about 64 million shares to dump.
ShareJunky ( Date: 19-Jan-2009 12:15) Posted:
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