Wednesday, February 3, 2010

Analysis of SP Ausnet Part 2


It is observed from the 2h 2009/2010 interim report that Sp Ausnet has the following strong stable characteristics:


· 86% of revenues are regulated



· 100% of regulated revenues locked in until 2011; 62% locked in until 2013



· Prudent gearing & 99% of debt hedged against movements in interest rates



· ‘A’range credit rating enables access to competitive finance



· Distributions & maintenance capexpaid from operating cashflows



Performances over several quarters are also encouraging:



SP Ausnet has delivered steady dividends since listing. Table D below depicts the dividend payouts since listing

Table D


There was a drop in the dividend issued for 2010 (interim dividend) due to a dilution of equity. In June 2009, SP AusNet successfully completed an accelerated non-renounceable entitlement offer (1 for 4 offer@$0.86) raising a total of $408.4 million. Moreover, due to dividend reinvestment plan, more dilution will occur as the number of outstanding shares increase. Investors have a choice of cash or script dividends.


At current price of SGD$1.14, SP Ausnet provides a decent yield of 8.8% (A$1 to SGD$1.25) before taxes. It is also below its NAV of SGD$1.28, hence investors can purchase SP Ausnet below its IPO (offer adjusted) and NAV price.


Investors can also opt for script dividend which will enable him to accumulate more of SP Ausnet at a 2.5% discount.


7 comments:

JW said...

Thanks SBC.

SP Ausnet is part of my radar for my dividend portfolio :)

axt said...

Hi,

Tks for the summary info.

Yes, I'm also looking to include this into my porfolio.

Sgbluechip said...

Hope it helps. It is thinly traded, hence there is not much retail or instituitional interest. Gearing is comparable to other global infrastructure funds.

Feng said...

Hi, I am a rookie investor. I read the company finance report and it shows negative EPS. Does this mean they overpaid the dividend just to keep the mgmt promise? How to interpretate it? Thanks alot!

Retail Investor said...

Hi,

Thanks for the posting. I'm very interested in the high dividend yield of SP Ausnet as well.

However, I took a quick look of their Free Cashflow (FCF) from 2005-2009, and they actually have quite a significant CAPEX, resulting in negative FCF.

Also, their interest expense is quite high (relative to their profit) due to their high debt-to-equity ratio.

Question is, are their dividends substainable?

wong said...

Hi SG Blue Chips,
Because of the lawsuit, presently the share price of SP Ausnet is quite depress, can you share you insight, what is your call? Buy,Hold or sell.

wong said...

Hi SG blue chips,
Due to the lawsuit, presently the price of SP Ausnet is quite low, can you share your insight? what is your call, buy, hold or sell?