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Latest Earnings From Keppel Infrastructure Trust: Distributions Unchanged

Keppel Infrastructure Trust (SGX: A7RU), or KIT for short, reported its latest earnings last evening. The reporting period was from 1 July 2016 to 30 September 2016 (3Q FY16).

As a quick introduction, KIT is a business trust that currently has four major businesses: City Gas, Concessions, Keppel Merlimau Cogen Plant (KMC), and DC One.

Due a change in the trust’s reporting period, comparisons for the latest results will be drawn with those from the three months ended 31 December 2015 (3Q FY15).

Financial highlights

Here’s a rundown on some of KIT’s latest financial figures:

  1. Revenue for 3Q FY16 clocked in at S$160.3 million, down 0.2% from 3Q FY15.
  2. Distributable cash flow came in at S$38.9 million, which was 6.9% lower compared to the S$41.8 million seen in 3Q FY15. In terms of distributable cash flow contribution from the four businesses, City Gas contributed S$10.1 million (down 38% from 3Q FY15), while Concessions, KMC, and DC one contributed S$18.2 million (up 3.6%), S$11.4 million (up 0.8%), and S$1.6 million (up from a negative S$65,000 in 3Q FY15), respectively.
  3. Distribution per unit (DPU) for the reporting quarter is 0.93 cents, unchanged from 3Q FY15.
  4. KIT reported an adjusted net asset value per unit of S$0.307 as of 30 September 2016. This is down from the S$0.343 seen at end December 2015.

At City Gas, lower revenue was seen as town gas tariff decreased with lower fuel prices. Cash flow there was lower as well “due to the time lag in the adjustment of gas tariffs to reflect actual fuel cost.”

Concessions also saw lower revenue – there was a lower dispatch at the SingSpring Desalination plant, partly offset by higher revenue from the Senoko boiler upgrade. KMC’s revenue contribution of S$32.5 million in the 3Q FY16 is comparable to 3Q FY15.

Let’s look at KIT’s debt profile now:

  1. Net Gearing for the reporting quarter stood at 37% with a blended average interest rate of 4%-5%. Net debt came in at S$1.49 billion with a weighted average term to expiry of 3.4 years. The trust has also hedged approximately 85% of its total loans. At the end of December 2015, KIT’s net gearing was a slightly lower 34% and 86% of total loans were hedged; the blended average interest rate was at 4% to 5%.
  2. For the reporting quarter, 59% of KIT’s loans are denominated in Singapore dollars. The remainder (A$709 million) is in Australian dollars which acts as a natural hedge for its Australian dollar cash flows.

A future outlook

KIT’s commentary on its future prospects is largely similar to that in 2Q FY16. You can check it out here. The trust mentioned that:

“The Trustee-Manager will evaluate asset enhancement opportunities in its enlarged portfolio, and will continue to identify and evaluate suitable acquisitions, including those from the Sponsor, under its investment mandate to further grow the Trust.”

KIT’s units closed at a price of S$0.51 yesterday evening. The trust has a trailing distribution yield of 7.3% at that price, and a price-to-book ratio of 1.7.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Esjay does not own shares in any companies mentioned.