Cordiant Digital Infrastructure (CORD)
02/12/2024
Results analysis from Kepler Trust
Intelligence
Cordiant Digital
Infrastructure (CORD) has released its interim results for the six
months ending 30/09/2024. Over the period, CORD saw its NAV per
share increase by 3.6%, and a total return of 5.4% based on the
ex-dividend opening NAV. The share price total return was
38.9%.
The NAV uplift was primarily
driven by operational performance and a reduction in discount
rates. Emitel saw a 6.4% value uplift, due to increased revenue
inflation-linked contracts, whilst CRA rose by 4.5% due to discount
rates, a pickup in revenue from a recent bolt on acquisition, and
its inflation-linked contracts. Speed Fibre rose by 34.2% following
the repayment of a debt facility and a reduction in the discount
rate. The company also saw revenue increase of
4.3%.
Currency was a headwind, with
sterling strength detracting from NAV over the
period.
The 'Buy, Build, Grow'
approach continues, the trust having outlayed growth capex on NAV
accretive projects such as the expansion of DAB radio in both
Poland and the Czech Republic, new customer connections for Speed
Fibre and additional cloud and data centre investment for
CRA.
The board proposed an interim
dividend of 2.1p per share which is in line with the recently
upgraded target. Dividend cover increased to 1.8x primarily due to
an increase in earnings.
Post-results, the trust
announced the intention to acquire a stake in DCU, alongside a
local investor and another Cordiant vehicle. This will take the
portfolio to six companies, subject to
completion.
The discount narrowed in the
period though remains wide versus the historic average. Share
buybacks have continued, and individuals within the team have also
made sizeable purchases.
During the period, as
previously announced, the managers refinanced their debt
facilities, allowing for consolidation at a company level and
additional liquidity. There is now undrawn cash available at
both the fund and the portfolio level. Gearing is now at 38.1% on
GAV basis, 71% of which is fixed.
Chair Shonaid Jemmett-Page
reflected on "the excellent performance of our portfolio companies,
which offer robust cashflows and strong earnings growth" whilst
also highlighting the "focus on efficient investment in the
existing portfolio, through disciplined capex spend, coupled with
bolt on acquisitions where appropriate".
Kepler
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In our opinion, these results
represent another solid step forward for Cordiant Digital
Infrastructure (CORD). Not only has the underlying portfolio
continued to develop, in line with the managers' 'buy, build, grow'
approach, but the trust's liquidity profile has improved through
the debt refinancing, which has removed the near-term refinancing
risk, providing a strong base to operate from.
The strong returns have been
driven by underlying operational performance. The two largest
positions contributed to strong aggregate portfolio EBITDA growth.
This has led to NAV growth ahead of target. We believe this
operational performance is testament to the managers' full
ownership approach.
Post period end, the
acquisition of DCU was announced, subject to completion. This will
help diversify the portfolio, whilst also increasing the allocation
to high growth potential area of data centres.
The discount narrowing
significantly in the period, giving strong share price gains, but
remains wide versus historic levels. As such, we believe it could
prove an opportunity for long-term investors.
Finally, the trust announced
a comfortably covered dividend of 2.1p. Considering the strong
underlying performance, we believe the board is in a good position
going forward.
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