Cordiant Digital Infrast... Share Discussion Threads

[houseofpain1] 20/9/2024 10:06

And by Tempus in The Times today:

The Cordiant Digital Infrastructure trust is one of many infrastructure funds that are trading well below the value of their net assets. But with lower interest rates and help around a cost disclosure issue, the clouds looming over the sector could be about to part.

Cordiant is designed to give investors exposure to the infrastructure that supports the digital economy, including data centres, telecommunications towers and fibre networks. The trust, which was the first digital infrastructure fund to list on the London market in 2021, has invested its £1 billion portfolio in five assets that together hold nine data centres, more than 1,000 towers and stakes in more than 10,000km of fibre networks.

Cordiant certainly compares well with Digital 9 Infrastructure, a rival fund, which this month wrote down its net asset value by around 43 per cent after obtaining an independent valuation on some companies in its portfolio.

Cordiant remains well respected in the City, with a portfolio of cash-generative companies, no debt maturing until 2029 and a well-covered dividend.

Indeed, the fund, which has a yield of 4.9 per cent, offers shareholder payouts that are covered 4.5 times by its portfolio’s adjusted cash profits and 1.6 times by free cashflow, after continuing costs. An update earlier this month showed that revenues generated by the companies in the portfolio grew 9 per cent in first quarter of its financial year, with adjusted cash profits up by 14 per cent.

Still, the troubles at Digital 9 — its shares are down by more than 60 per cent in the past 12 months alone — have shaken investor confidence in the sector. This goes some way to explain why Cordiant’s shares still trade at a third below their net asset value, even with a 10 per cent rally in the price so far this year.

Given the progress between the government and the FCA on cost disclosure rules, which have hit infrastructure funds particularly hard, and good progress within the portfolio, Cordiant’s rally looks like it still has a way to go yet.

Advice: Buy
Why? Brighter outlook for infrastructure trusts

[cc2014] 19/9/2024 08:33

Tipped by Questor in the Telegraph

[retail_rights_research] 15/9/2024 21:47

Excerpt of research note from Deutsche Bank Numis on CORD's latest trading update:
"Strong trading update CORD continues to deliver positive updates to the market, illustrating the quality of the underlying portfolio base which have been acquired at attractive multiples and continue to achieve impressive revenue and EBITDA growth as management teams execute business plans. Dividend cover metrics remain very healthy at 1.6x and the manager continues to highlight opportunities for growth capex within the existing asset base to further support attractive returns. The board also point to a number of promising initiatives under way to create further value. Importantly, CORD has ensured it has healthy levels of liquidity to facilitate its business plans and a robust balance sheet which is more conservatively geared than other digital and mid market infrastructure strategies. We continue to view the shares as offering excellent value for access to a high-quality portfolio which gives exposure to one of the most significant infrastructure investment themes."

[petomi] 12/9/2024 15:24

Fair summary in the IC contrasting us and DGI9. GLA

A tale of two digital infrastructure trusts - Investors' Chronicle (investorschronicle.co.uk

The contrast between Digital 9 and the only other peer on the market, Cordiant Digital Infrastructure (CORD), couldn’t be greater. Stifel analysts recently called Cordiant “structurally robust”, emphasising that it has no debt maturing until 2029, and the dividend is covered; Numis analysts have praised its portfolio of “cash generative companies at attractive multiples, which are capable of self-funding growth, supported by stable and flexible balance sheets”.

We’re all perfect investors in hindsight, but looking at what the two trusts did differently can perhaps teach us something. Cartridge says that a key mistake made by Digital 9 was that it tried to please everyone, by offering both an attractive dividend and the potential for high growth. In a changed funding environment, this proved impossible to deliver. Numis analysts agree, noting that at its IPO, Digital 9 promised a dividend that was uncovered and looked high in the context of its investments in “growth-hungry digital companies”. “This was compounded by the acquisition of businesses that could not fully self-fund growth and weak equity markets removing the prospect of raising fresh equity,” they add. In a nutshell: if it looks too good to be true, it’s probably because it is.

By contrast, Cordiant was managed more prudently and was able to gradually increase its dividend. Cartridge also notes that there is a good alignment of interest between shareholders and Cordiant’s board, with chair Steven Marshall owning more than £8mn-worth of shares.

Cordiant was trading at a 34.5 per cent discount as of 9 September, and part of this could be due to investors becoming sceptical about the sector after Digital 9’s woes. Once Digital 9 is taken off the market, there is hope that Cordiant will be able to “shine brighter”, Cartridge concludes.

[williamcooper104] 09/9/2024 01:48

Funny they IPOd around the the same time as DGI9 What a difference Hold CORD (with a little capital gain) and baghold DGI9 alas

[retail_rights_research] 08/9/2024 21:18

Share price discount to reported net asset value is indeed significant on this one. I also suspect the unwarranted association with Digital 9 is not helping.

From what I can tell:
- Significant insider buying, including from the founder who seems to have accumulated over 10 million shares
- Research analysts all seem to be positive (incl. Investec, Jefferies, Numis, Stifel, Liberum, Barclays)
- They just refinanced a whole bunch of debt facilities on seemly good terms (bullet repayments) - so no maturities until middle of 2029
- Leverage seems conservative for an infrastructure play
- Dividend is well covered by cash flow
- Ample liquidity to fund new investments
- EBITDA is growing fast - 14% in the recent trading update
- Exposure to non-UK geographies e.g. Poland, Czech Republic, Ireland, US - this is a great geographical diversification play
- Transparent reporting - they report every quarter in a lot of detail - not every investment trust does this
- They should of course be benefiting from the mega trends of data growth, AI, etc.

[spectoacc] 08/9/2024 17:24

Bits would be fine - they can cherry-pick - but the whole thing, definitely not, DGI9 is a basket case (holder of both).

[cousinit] 08/9/2024 14:14

DGI9 assets must be getting down to attractive valuations now. Have to say I'd have mixed feelings if CORD used some of that financial headroom to mop up bits of DGI9...

[petomi] 08/9/2024 11:16

Agreed probably

NAV at March YE was 120.1p so our price of 80p is c33% discount, and the NAV can hardly have fallen since then, ie the discount which emerges when they publish hard NAV numbers next may be even higher.

I'm sure sector sentiment from the DGI9 fiasco is part of the discount issue (hence CORD emphasising their financial strength).

I am normally wary of companies bewailing their share price undervaluation but the recent manager purchases are certainly a meaningful vote of confidence.

If they can start unlocking value from Hudsons Yard (which has been the only hiccup to date) there could be a rerating to 100p plus with still a discount to NAV.

hxxps://www.morningstar.com/news/business-wire/20240820518464/hudson-interxchange-announces-major-expansion-at-new-yorks-iconic-60-hudson-street-facility

GLA

[probablynotphil] 06/9/2024 11:23

Decent Q1 results. I wonder if the bad news at DGI9 is dragging us down slightly though.

[wad collector] 23/8/2024 20:36

Looks like a very positive sign. Hard to imagine such a big investment from the Chairman without a good reason.

[probablynotphil] 23/8/2024 11:40

Massive purchases. Makes you wonder if there's some big news coming

[spectoacc] 23/8/2024 06:09

"...Is pleased to confirm that Steven Marshall, Chairman and Co-Founder of Cordiant Digital Infrastructure, purchased on 21 August 2024, a total of 1,000,000 ordinary shares in the capital of the Company at an average price of 76.6 pence."


Have to wonder where we'd be without his buying, but clearly a believer.

[spectoacc] 21/8/2024 06:09

"...Is pleased to confirm that Steven Marshall, Chairman and Co-Founder of Cordiant Digital Infrastructure, purchased in July and August 2024 a total of 440,919 ordinary shares in the capital of the Company at an average price of 74.56 pence."

[yump] 12/7/2024 12:00

Oh - thought I spotted a couple but I’ve got information overload doing research !

[cc2014] 12/7/2024 06:14

no. CORD have no assets in the UK and won't be buying any

[yump] 11/7/2024 18:15

Labour have specifically mentioned datacentre development as an infrastructure aim - presumably good in some way for Cord ?

[wad collector] 02/7/2024 08:34

I see they have posted the Kepler results analysis as an RNS. A positive document, but hard to know how to view an analysis from a House broker with direct interest.
The valuation gap makes sense to buyback.
Those Chairman buys are encouraging too; perhaps time to add some more....

[williamcooper104] 01/7/2024 15:29

Quite right I can understand the company thinking that with all the broker messing about there's not a lot of retail But they still ought to be engaging

[rogen83] 01/7/2024 11:13

I gave the company and their PR team a hard time by not allowing private investors to attend the analyst call. Whether you own 50k shares or 1m

[rambutan2] 01/7/2024 02:23

Here's the recent results presentation, for anyone (like me) who was not allowed (by the gatekeepers) to attend it live:

[probablynotphil] 26/6/2024 07:59

Hudson doesn't concern me too much. It's a smaller part of the portfolio and still has significant upside potential over the longer term. I remember reading somewhere that the average purchase price in EBITDA across the full portfolio is ~10. Way below the average across the market of 14+

Normally I'd be concerned with the high concentration of just 2 companies, but Emitel and CRA are absolutely flying at the moment. It is actually working in the portfolio's favour and I can't see either company slowing down.

[williamcooper104] 24/6/2024 13:24

Given when then raises their equity it would have been very difficult to not do at least a bit of over paying

[cc2014] 24/6/2024 08:04

I don't think I've ever seen a company with a market cap as large as this where the Director keeps buying and buying and the market keeps saying it doesn't believe the story and numbers.

Steven Marshall must get up on the morning at the end of the closed period and wonder what price he's going to get his lump of shares for and be endlessly surprised at the volume of the sellers.

The only thing that concerns me is that we know they overpaid for Hudson and whilst the NAV on that has now been significantly marked down and it was purchased at the top of the market and the rest hasn't been, I guess I have a tiny concern they have overpaid elsewhere.

Time will tell. A 35% discount to NAV still seems far too much to me.