BBGI
Global Infrastructure (BBGI)
02/09/2024
Results analysis from Kepler Trust
Intelligence
BBGI Global Infrastructure
(BBGI) has released its interim results for the six months ended
30/06/2024. The net asset value (NAV) total return for the period
was 2.4%. This return consisted of a dividend of 3.965p per share
paid in April and was partially offset by a modest 0.3% decrease in
NAV per share to 147.4p per share, which was largely due to the
impact of net negative movements in the currency
markets.
BBGI reaffirmed its 6%
dividend growth target for 2024 and 2% dividend growth target for
2025.
The dividend remains secure,
both in the short and medium term. The cash dividend cover for H1
2024 was 1.47x and the FY 2024 cover is expected to be in the range
of 1.3x to 1.4x.
BBGI remains in strong
financial and operational positions. There were no material
lock-ups or default events during the period and net cash generated
by the portfolio companies were ahead of projections. There is no
structural gearing at the group level, no cash drawings on the
revolving credit facility, and BBGI has net cash of £20.6
million.
This gives it the chance to
consider opportunities to enhance long-term shareholder value. A
number of potential investment across various sectors and regions
were considered in the period, but none were made as they did not
meet BBGI's requirements.
Duncan Ball, CEO of BBGI,
said: "Stabilising, and potentially reducing interest rates,
combined with an ever-increasing demand for infrastructure
investments, presents a long-term growth opportunity for BBGI. As
governments worldwide navigate the challenges associated with the
high levels of public debt and the growing need for new
infrastructure projects and repairing and maintaining aging
infrastructure, specialist investors like BBGI are well positioned
to play a critical role."
Kepler
View
BBGI Global Infrastructure
(BBGI) has reported robust performance, both operationally and
financially.
The globally diversified
portfolio of 56 high-quality, 100% availability-style
infrastructure assets sits at the low-risk end of the sector. We
think that this, along with its conservative financial management
have been major contributors to the consistent and resilient
performance that it has delivered.
BBGI's steady, growing
dividend record since it was launched in 2011 continues. The
dividend growth shown in the full-year 2023 and full-year 2024 is
testament to BBGI's stable, predictable cash flows with
high-quality, contracted inflation linkage of
0.5%.
BBGI's weighted average
discount rate is 7.3%. In simple terms, deducting the OCF leaves
shareholders with a prospective NAV IRR of 6.4%. However, if you
include the current share price discount to NAV narrowing to zero,
this translates to a prospective share price IRR of 7.6%. Prior to
the increasing interest rate environment, BBGI's share price traded
at a premium to NAV.
The trust's discount is one
of the lowest in its peer group, but remains relatively wide at
9.7% compared to its five-year average premium of 12.8%. In our
view, with bond yields having potentially plateaued, this could be
an interesting moment to consider BBGI's attractive prospective
real returns.
CLICK HERE TO READ THE FULL REPORT
Visit
Kepler Trust Intelligence for more high quality
independent investment trust research.
Important information
This report has been issued by Kepler
Partners LLP. The analyst
who has prepared this report is aware that Kepler Partners LLP has
a relationship with the company covered in this report and/or a
conflict of interest which may impair the objectivity of the
research.
Past
performance is not a reliable indicator of future results. The
value of investments can fall as well as rise and you may get back
less than you invested when you decide to sell your investments. It
is strongly recommended that if you are a private investor
independent financial advice should be taken before making any
investment or financial decision.
Kepler Partners is not authorised to
make recommendations to retail clients. This report has been issued
by Kepler Partners LLP, is based on factual information only, is
solely for information purposes only and any views contained in it
must not be construed as investment or tax advice or a
recommendation to buy, sell or take any action in relation to any
investment.
The information provided on this
website is not intended for distribution to, or use by, any person
or entity in any jurisdiction or country where such distribution or
use would be contrary to law or regulation or which would subject
Kepler Partners LLP to any registration requirement within such
jurisdiction or country. In particular, this website is exclusively
for non-US Persons. Persons who access this information are
required to inform themselves and to comply with any such
restrictions.
The information contained in this
website is not intended to constitute, and should not be construed
as, investment advice. No representation or warranty, express or
implied, is given by any person as to the accuracy or completeness
of the information and no responsibility or liability is accepted
for the accuracy or sufficiency of any of the information, for any
errors, omissions or misstatements, negligent or otherwise. Any
views and opinions, whilst given in good faith, are subject to
change without notice.
This is not an official confirmation
of terms and is not a recommendation, offer or solicitation to buy
or sell or take any action in relation to any investment mentioned
herein. Any prices or quotations contained herein are indicative
only.
Kepler Partners LLP (including its
partners, employees and representatives) or a connected person may
have positions in or options on the securities detailed in this
report, and may buy, sell or offer to purchase or sell such
securities from time to time, but will at all times be subject to
restrictions imposed by the firm's internal rules. A copy of the
firm's Conflict of Interest policy is available on
request.
PLEASE SEE ALSO OUR TERMS AND CONDITIONS
Kepler Partners LLP is authorised and
regulated by the Financial Conduct Authority (FRN 480590),
registered in England and Wales at 70 Conduit Street, London W1S
2GF with registered number OC334771.
