Asian Pay Television Trust (APTT)

[Nick]

it is possible that they have high non-cash expenses like depreciation, hence the business is generating positive cash flow after deducting off depreciation.

E.g. Company A: cash revenue (+250), expenses in 1) labour (-50), 2) Depreciation expense (-300). Reported Loss (-100),
cash flow that is generated minus depreciation (+200)

The problem is in real life even if you are a crazy capex skimmer, at best one can decrease the replenishment ratio to 30-40% of depreciation temporarily. That might help a fair lot, but without looking at the numbers in detail, it still seems unlikely one can turn from red to 9% dividends just by capex skimming.

Even if this can be done, wouldn't such a stunt spell disaster a few years down the road? They will be forced to raise capital at uncompetitive prices by then...

The pro forma financial statements in the prospectus do forecast profits in FY 13 and FY 14 of $54 and $75 million respectively. If I am not mistaken the reason for losses was due to high interest expense from bank loans, losses on derivative instruments and shareholder loans. The latter were actually 'dividends' paid to its Macquarie shareholders. The financial statements pre-IPO should be interpreted very differently from the post-IPO ones. There are a wealth of postings shared by fellow buddies in this thread which could be useful to you.

The Fund do incur capex as stated in the forecast cash-flow statement.

FY 2014 (Forecast)

Ops CF: $190 mil
Capex: ($40 mil)
Interest Exp: ($42 mil)
FCF: $108 mil
Project distribution in 2014: $118 mil

(Not Vested)