KEPPEL INFRA TRUST
A7RU.SI
KEPPEL INFRASTRUCTURE TRUST (KIT SP) 9M15: Business Performing Within Expectations
RESULTS
3Q15 distributable cash flow up 18%.
- Keppel Infrastructure Trust (KIT) reported 3Q15 distributable cash flows of S$41.8m, 18% above our quarterly estimate of S$35.3m.
- The variation arose primarily from the City Gas business unit, which returned a profit of S$5.2m for 3Q15 vs a loss of S$1.7m in 2Q15, owing to a time lag in adjustment of gas tariffs.
- The concession business saw a small uptick from lower electricity costs. All other units performed within expectations.
DPU of 0.93 S cents announced.
- Distributable payout per unit (DPU) for 3Q15 was 0.93 S cents, in line with guidance of annualised DPU of 3.73 S cents.
STOCK IMPACT
Update on Basslink outage.
- On 20 Dec 15, Basslink suffered a link outage, with evidence currently pointing to a subsea cable fault approximately 100km off the Tasmanian coastline.
- Repairs to the cable are currently underway, and management expects the fault to be rectified by end March, barring unforeseen circumstances.
- As it stands, the event is likely to be fully covered by insurance and payments currently made by Basslink for the repairs should be claimable.
Availability payments more likely than not to be unaffected.
- According to management, the contractual terms in the Basslink Service Agreement provides for a force majeure event, which addresses the issue of availability payments.
- For now, KIT’s DPU is unaffected as Basslink does not contribute till after 2025.
City Gas distributable cash flow might dip slightly.
- Distributable cash flow from the unit might see a slight dip going forward as gas tariffs fall.
- The tariffs are indexed to global oil prices and expected to decline in tandem with the market.
- The net impact might be cushioned by strong customer growth, as an 8% decline in gas tariffs for 2015 was offset by strong customer growth of 4.8% yoy. City Gas makes up roughly 28% of KIT’s distributable cash flow.
Tweaking estimates for 2016.
- We adjust our estimates, lowering cash flows from City Gas and making adjustment tweaks. Our 2016 distributable cash flow rises 7% to S$151.6m.
VALUATION
- Maintain HOLD with a lower target price of S$0.55 as we tweak our earnings and cashflow estimates.
Foo ZhiWei
UOB Kay Hian
|
http://research.uobkayhian.com/
2015-01-19
UOB Kay Hian
SGX Stock
Analyst Report
0.55
Down
0.56
