Keppel Infrastructure Trust - Decline in distributable income in 3Q24

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Stocks

By Peggy Mak • 27 Oct 2024 • 0 min read

Keppel Infrastructure Trust's 3Q24 distributable income was S$15m, down from S$40m in 2Q24 and S$51m in 1Q24.

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Rating:

Neutral

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Price Target*:
$0.48

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Upside/Downside:
+7.87%

*Target price is for 12 months

Keppel Infrastructure Trust 9M24 operational update

Keppel Infrastructure Trust (KIT) provided an operational update for 9M24.

9M24 distributable income (DI) fell 60% year-on-year to S$106m. Excluding special distribution of S$131m in the previous year, the decline was smaller at 21.3%.

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Source: Company Data

3Q24 distributable income was S$15m, down from S$40m in 2Q24 and S$51m in 1Q24. 

This was mainly attributable to growth capex incurred by Ixom (S$20m), reduced contribution from Singapore waste and water assets (S$9m), and debt amortization for European Wind Farm (BKR2). The new acquisitions, German Solar Portfolio and Ventura, contributed S$11m in 9M24.

KIT is divesting its entire 50% stake in Philippine Coastal Storage and Pipeline Corporation (PCSPC), to be completed in early 2025. KIT will receive cash of S$192m, subject to adjustments. It will book disposal gain of S$27.5m. Annual distributable income is expected to fall by S$6.2m, or 1.8%, after the divestment. The net proceeds will be used for debt repayment, capex and working capital.

Aggregate leverage, fell to 40.1%, from 44.7% at end-June.  The issuance of S$200m 4.9% perpetual securities and S$200m raised from private placement helped to lower net debt to S$2.49bn. The average cost of debt is 4.57%. 

What would Beansprout do?

Notwithstanding the lower DI, our DPU forecast is unchanged, as the distribution can be topped up with the proceeds from the sale of PCSPC or take on more debt.

We estimate FY24E and FY25E DPU at 3.67 cents and 3.6 cents, respectively. This translates into yield of 8.2% and 8% for the two years. 

We maintain our Neutral rating and target price of S$0.48. 

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