K-Green Trust

[cyborg]

K-GREEN TRUST has just released its unaudited results for the third quarter ended 30 September 2010

1. The profit after tax achieved for the period from date of listing on 29 June to 30 September 2010 was $4.6 million, 26.5% higher than forecast.
2. Profit after tax for the third quarter was $4.4 million.
3. EPS for the period from date of listing to 30 September 2010 was 0.73 cents.
4. Free cash flow for the third quarter was $19.2 million.
5. Net asset value per unit as at 30 September 2010 was $1.15.

Full details can be downloaded here

[Nick]

3Q results are as expected...but its very low yield is a put-off. I think the yield is around 2-3% after taking into account NAV depreciation ?

[Stocker]

3Q results are as expected...but its very low yield is a put-off. I think the yield is around 2-3% after taking into account NAV depreciation ?

Exactly. The difference is actually taking back own capital that invested . Does it make sense ?

[Nick]

3Q results are as expected...but its very low yield is a put-off. I think the yield is around 2-3% after taking into account NAV depreciation ?

Exactly. The difference is actually taking back own capital that invested . Does it make sense ?

The stock being priced at 2% yield (after taking into account depreciation) makes sense since the Trust's counter-parties are NEA and PUB which have extremely high credit rating. So I guess it should be expected that their yields to match those of SGS bonds ? Problems only start if you believe that the Trust is yielding 7% return perpetually.

I rather stick to the other trust whose yields are derived solely from operating profits.

[momoeagle]

Well, industrial REITs have properties with leasehold of between 30 years to 60 years too.
And REITs are with gearing.


KGT is in some ways similar. And it has no gearing. Furthermore, the income is guaranteed during the leasehold. This "safeness" of income is what is giving it a slight premium as compared to other industrial REITs.

[Nick]

Well, industrial REITs have properties with leasehold of between 30 years to 60 years too.
And REITs are with gearing.


KGT is in some ways similar. And it has no gearing. Furthermore, the income is guaranteed during the leasehold. This "safeness" of income is what is giving it a slight premium as compared to other industrial REITs.

Industrial REITs are trading at around 5-6% yield based on their yield after taking into account depreciating NAV.

If you seek 'safe income' at such low yields (2%), wouldn't it make better sense to purchase SGS bonds ?

I guess you expect KGT to eventually gear up and make high yielding acquisitions. Its yield will definitely improve.

[momoeagle]

Yes, I expect them to gear up eventually to the level of Industrial REITs at the minimum. Will decide whether to keep or sell after that happens.

[Nick]

KGT released its FY 10 results and proposed a DPU of S$0.0431 for 2H 10.

http://info.sgx.com/webcoranncatth.nsf/V...C0032FB15/$file/KGTFY2010Full.pdf?openelement

The trust remains debt-free and generating good cash-flow.

But since they are not retaining income to replenish their assets, the NAV will trend downwards until it ceases to exist.

Please correct me if I am wrong.

(Not Vested)

[Musicwhiz]

Business Times - 19 Jan 2011

K-Green profit after listing beats forecast

DPU from listing date to year-end 4.31cents, 10.2% higher than 3.91cents forecast

By LYNN KAN

K-GREEN Trust has posted a net profit of $8.73 million for the period from its listing on June 29 to Dec 31, 2010, 22 per cent higher than forecast.

Including the net profit of $847,000 for the period Jan 1 to June 28, 2010, when it was a private trust, full-year net profit for the green infrastructure assets trust came to $9.57 million.

Full-year revenue was $65.8 million, while revenue garnered since listing was $49.3 million.

The latter is 22.1 per cent lower than the forecast of $63.3 million, mainly due to lower contributions from a delay in flue gas upgrading works for K-Green's Senoko Waste-to-Energy Plant.

K-Green holds two other plants: the Keppel Seghers Tuas WTE Plant and the Ulu Pandan NEWater Plant.

The majority of K-Green's full-year revenue - $35.3 million - came from the operation and management of its three plants. The Senoko Plant flue gas upgrade brought in another $16.5 million.

Distribution per unit (DPU) for K-Green from the listing date to the year-end was 4.31 cents, 10.2 per cent higher than K-Green's forecast of 3.91 cents. K-Green said its annualised distribution yield stands at 7.9 per cent, based on a unit closing price of $1.07 on Dec 31, 2010.

K-Green disclosed its earnings per unit from the date of listing to Dec 31 is 1.39 cents. As at Dec 31, 2010, net asset value per unit for the group - which includes the performance of the holding company, K-Green and the three plants - stands at $1.16.

K-Green has said it will add more assets to its holdings, understandably from regions where it has a focus in 'Asia, Europe and the Middle East'.

Said Thomas Pang, CEO of Keppel Infrastructure Fund Management, trustee-manager of K-Green Trust: 'The growing sustainable development sector now and in the foreseeable future will drive demand for waste management, water and wastewater treatment, renewable energy, energy efficiency and other green initiatives.

'K-Green Trust will be well positioned to evaluate these opportunities to grow our asset base.'

K-Green Trust ended trading up 2 cents to $1.10 yesterday.

[Nick]

KGT 1Q 11 Results:

http://info.sgx.com/webcoranncatth.nsf/V...2002E8D3E/$file/KGT1Q2011.pdf?openelement

1Q FY2011 RESULTS HIGHLIGHTS
1. The profit after tax achieved for the first quarter of 2011 was $3.5 million, 5.4% higher than projection.
2. Earnings per unit (EPU) for the first quarter of 2011 was 0.56 cents.
3. Net asset value per unit as at 31 March 2011 was $1.12.
4. Free cash flow for the quarter was $9.5 million.

Personally, we must remember that KGT is operating as a self liquidating trust since it isn't retaining any income to replenish its assets. As we can see, its NAV has shrunk from $726 million to $704 million. Hence, the true dividend yield is a lot lower. This comes to no surprise since the assets are of high quality with SG Govt as the counter-party. Stable operating results and debt-free trust.

Please correct me if I am wrong.

(Not Vested)