Hicl Infrastructure Share Discussion Threads

[speedsgh] 02/5/2024 09:48

Falling inflation weighs on ‘excellent’ value HICL Infrastructure -

The inflation-linked income fund reports a small fall in net asset value, prompting analysts to debate how good value shares in the 6.8% yielder are on a 21% discount...

[skinny] 30/4/2024 07:03

The Company's Annual Results are scheduled for release on 22 May 2024.

The Board expects to announce a decrease in the Company's unaudited Net Asset Value ("NAV") per share of approximately 1.2 pence to 158.2 pence as at 31 March 2024 (30 September 2023: 159.4 pence). This statement explains the Company's approach to determining the NAV as at 31 March 2024.

The expected NAV decrease is mainly driven by the following macroeconomic factors:

· Actual inflation for the year to March 2024 being lower than the assumptions used in the portfolio valuation as at 30 September 2023;

· A reduction in UK inflation assumptions for FY2025 and FY2026, aligning with market consensus;

· A reduction in deposit rate assumptions for all jurisdictions except the USA, aligning with market consensus; and

· Adverse foreign exchange movements as sterling strengthened in the period, net of hedging.

Operational performance of the portfolio was broadly in line with expectations. During the second half of its financial year, the Company disposed of its remaining interest in the Northwest Parkway toll road project in the USA. The proceeds received represented a premium to the Company's September 2023 valuation of 30% / 2.1 pence. The acquisition of a 3.1% incremental interest in the A63 Motorway concession generated 0.7 pence as it was revalued to HICL's existing holding. These two items partially offset the reduction caused by the macroeconomic factors outlined above.

[williamcooper104] 23/4/2024 14:33

Yep I dumped a considerable amount into BBGI close to the all time high, and while I'm sitting on a large £ amount of capital loss by income has grown considerably It's part of the forever portfolio so really all that matters is the income

[mrscruff] 23/4/2024 14:10

Thanks for that. The forward yield for BBGI is significantly more than I expected given that it paid out 7.93p in total for over the past 12 months. Agree in general and INPP is my highest weighted holding in the entire portfolio and HICL my lowest of the 3.

[williamcooper104] 23/4/2024 12:50

And on forward divi yield I'm at INPP - 6.91%HICL - 6.63% BBGI - 6.53% Interesting that BBGI doesn't yield much less than HICL So not sacrificing much in way of short/medium term income If/when HICL are able to get their water company paying dividends it's likely they'll restart growing their divi

[williamcooper104] 23/4/2024 12:46

Just looking at my spreadsheet for the three I take their valuation discount rates, take away managembt fees and then adjust for the discount to NAV as best measure of long term returns Getting to 8.83 for INPP8.52 for HICL 7.45 for BBGI BBGI is more conservative on future inflation so on a like for like basis can probably add c30bps to their return All of these are attractive returns for the risk but I prefer INPP as slightly higher return and BBGI for lower risk

[mrscruff] 23/4/2024 11:40

FYI There is a bot that automatically votes all our posts down.

[mrscruff] 23/4/2024 11:38

Hi William (I am not the one who voted you down btw).

The trio have all "re-set" to more of a bond proxy by removing the leverage...at least while the normal/nominal rate of interest in years to come is unknown. If your after that growth edge using leverage then only have 3IN and PIN in the generalist space.

With that rather simplistic view in mind HICL is probably the best value for now at these prices.... tomorrow could be another day though.

[williamcooper104] 22/4/2024 21:26

It is alas the largest and it's not paying a dividend IIRC The forward yields on INPP and BBGI aren't a lot lower given they've got divi growth pencilled in Hold a lot more of them but still hold a little HICL - have been in it to a greater or lesser amount since its IPO

[mrscruff] 22/4/2024 20:26

Affinity Water is the largest holding at 7 percent however they seem OK and the rest is well diverfide into high quality defensive sectors. Yes I marginally prefer those other two but HICL has come down in price and so the yield for new investors is very attractive nearly 7 percent and that's higher than high quality bonds or gov bonds. It's a buy at these levels to diversify ones portfolio and provide more quarterly dividends that smooth out INPP twice yearly distributions.

[williamcooper104] 14/4/2024 15:14

Yep INPP and BBGI better HICL got hit with economically sensitive assets during covid and then when they recovered it's got its water co

[petersinthemarket] 14/4/2024 13:00

After years of steady dividend growth, HICL has held its dividend at 8.25p a share (yld 6.5% at 126p/sh) since its financial year to March 2020, but the trust doesn't plan to increase its dividend target in respect of financial years to March 2024 and 2025, meaning that the real value of shareholders investment income will decrease significantly. Jefferies analysts find dividend plans disappointing. By estimating future dividend cover based on cash flow projections, they believe that whether HICL will be able to resume dividend growth is largely contingent on inflation outperformance and HICL looks a bit like a bond proxy. 

[williamcooper104] 08/4/2024 15:47

Plus unwinding PFI leads to windfall profits and is extremely painful/time consuming Just arbitrarily ripping them up won't play well as will hit same investors they need funding from

[williamcooper104] 08/4/2024 14:42

That was a risk with Corbyn Labour Current Labour has no plans to get aggressive not least as it needs billions from the private sector to fund its climate plans It's rates and with HICL specific risks on some of its economically sensitive assets and water company

[schofip] 08/4/2024 12:46

I used to deal in these some time back but I am a bit out of touch with what is driving the price at the moment.If I had to guess I would say the prospect of an incoming labour government may want to unwind some of the lucrative PFI deals that hicl is invested in, what other positive/negative drivers are there.

[fabius1] 19/3/2024 21:47

'It's a 50m buyback. Will make no difference at that level.' Indeed, but it will certainly be seen as a value marker.

[spoole5] 19/3/2024 18:58

It's a 50m buyback. Will make no difference at that level.

[elsa7878] 19/3/2024 15:45

Think the buy back is needed to get the share price moving. Need to wait for the sale proceeds…

[williamcooper104] 19/3/2024 14:38

Problem was the divi cash cover was very tight before inflation took off Plus the water company which is if not their largest investment one of the largest isn't paying out a divi

[spoole5] 19/3/2024 14:19

Inflation protection? Well the dividend certainly hasn't been rising

[unastubbs] 15/3/2024 06:41

A very positive piece in Shares magazine. I'm considering buying more.

[elsa7878] 29/2/2024 09:53

The buy back is merely symbolic and clearly sill not move the share price but it has highlighted the inherent value hidden in some of these structures.
Agree with Adam once the cuts start these will re-rate pretty fast. Tempted to nibble in advance at a few and slowly build over the months.