Digital 9 Infrastructure Share Discussion Threads

[duncansawalker] 03/1/2025 06:43

1roddy
Not simplistic... All fair & well made points, our 'recovery'% on assets is looking far better than the market is pricing in, and quite frankly the RCF maturity is almost a non-issue now. Elio and Sea Edge worry me less than Aquacomms (obviously on a % of portfolio basis) but equally, if we really do see acceleration of demand for data transmission come into play in next 12 months, IMO Aqua has the most potential for surprises to the upside. Especially if the Magnificent 7 keep shooting out the lights in the U.S...it's coins down the back of the sofa to them I'm surprised they wouldnt want to own more capacity of a network with a known partner that they have planned, constructed and operated the business with for several years. I know nowt about this! Pure speculation, but what makes business sense to me...

[1roddy] 03/1/2025 04:16

This is my overly simplistic view now;
We invested £39m in EMIC and it sold for 90p in the £. Less 5p for costs so basically 85p in the £. We invested £450m in Verne, Ficolo, Volta & the cap ex associated. The headline sale price was £450m so a £ back for a £ spent albeit its 80p in the £ at the moment and without the earn out coming in. My point, based on money spent and money coming back, it’s not 20p in the £ where the shares are trading. I too therefore think the NAV is a red herring but let’s see what Elio, Aqua and Sea Edge yield vs capital outlay. This was in a very precarious situation for the last 12/18 months, things now look very different IMO and massively de risked and in a good position to get the best from the assets.

[duncansawalker] 02/1/2025 22:44

craigso: yes i suppose it's a balance of the above, plus the likely pretty heavy discount the market would place on cashflows in a year. 10-12%?
In this environment, even at 150M for aquacomms there might be a deal to be done and, according to my numbers, that'd make the portfolio worth about 30-35p excluding Arqiva and the VLN.
Personally, I think the 45p is a bit of red herring and the portfolio will recover higher. In order to get to that price it requires some massive kitchen sinking, and some assuptions about Verne performance that suggest Arvian arent throwing serious capex at the problem.
Forgive the wee bit of ramping, and feel free to laugh, but my ever optimistic gut says 50p floor now.

[craigso] 02/1/2025 21:33

In Infrared we trust... If the RCF is easily paid off, I can't see them dumping Aqua at a big loss - surely they would hang onto it for another year. (unless there is so much capex required that they have no choice)

A little data point to keep in mind. The EMIC sale references a 30 June NAV of $49.2m. My Excel spreadsheet - which I believe is based on post-Verne NAVs of 31 March - has it at £38.1m. That suggests to me that EMIC wasn't part of the massive September write-down to an overall - but not broken down asset-by-asset - NAV of 45p.

It does strike me as odd that a project with construction halted due to the Houthis wasn't written down when Aqua was. Perhaps it doesn't really matter, but the more Aqua and Arqiva were written down in value back in September, the easier it ought to be to deliver that 45p of NAV.

[wskill] 02/1/2025 17:07

Aqua Comms advanced discussion duncansawalker is very good news on its own, at the least we can expect a decent price after this sale .

[duncansawalker] 02/1/2025 10:27

Wskill - it's a very interesting (and welcome!!) development, and a very 'fair' price extracted given I would imagine the bulk of the future forecast revenues are generated by the link to Mumbai as opposed to the ME/African eastern coast. But Im not sure it's nailed on as a 'game changer'.
It's a net, say, 20M bump? EMIC-1 was never worth 0, but recovery value was always in question for sure, and restricted cash for future developments had to be held against it.
It might well bode well for the Aquacomms sale, though my worry here is they are not so easily compared as the fibre lines it operates (around the UK, Europe and to the USA) are most likely extremely competitive (perhaps why revenue has increased but not ebitda) and why the 3i infra boss talks of 'selectivity' being essential when choosing fibre routes to invest into. Indicates why they were so keen to serve the Indian market which has has had both massive growth in demand and constrained bandwidth supply.
Fingers crossed the sheer increase in volume of data transmission required over next few years eclipses any oversupply of capacity / technological progress in transfer rates, and a buyer can forecast a time in the very near future when prices stablise.

[wskill] 02/1/2025 08:12

Back in again this morning this sale is a game changer as I believed it held little value .

[craigso] 01/1/2025 09:32

I do wonder about Elio now, though. That Irish Times article must have surely been a sell-side leak to try to create a competitive bid process without competing bids actually existing.

Otherwise why not pay off the RCF with the sale of a clearly non-core asset where the selling price isn't all that relevant in the grand scheme of things?

[tigerbythetail] 31/12/2024 12:37

I had EMIC valued at zero in my estimations, so I'm very happy with this deal.
As others have commented, it also bodes well for the bigger Aquacomms sale.
I still think this will need a fair amount of patience, but I'm confident in a decent final outcome.

[mark5man] 31/12/2024 09:53

excellent news to end the year with - still underwater but unlike the cables now in the shallows

@nigel I agree it shows someone has a clue and able to get stuff done

think this will move up further when the market returns in the new year

[craigso] 31/12/2024 09:04

Looks like a screaming buy now. DYOR.

No need to focus excessively on the RCF - IMO - because DGI9 will be bringing in £33m (almost 4p per DGI9 share) for something that could easily have been a total write-off. It also bodes extremely well for a good price for Aqua.

[nigelpm] 31/12/2024 08:26

Hugely important development as it almost deals with the rcf down to a very small amount, provides assurance that remainimg assets can be sold and confirms aquacomms close to a sale.

[marlint111] 31/12/2024 07:44

Excellent development

[spectoacc] 31/12/2024 07:06

Useful hole in the remaining RCF:

"The $42m consideration, which is net of $2.6m of transaction costs, represents a 15% discount (approximately 0.7p per share) to the latest valuation"

"The Company is discussing options with the RCF lenders, to extend the remaining balance of the RCF beyond the current maturity date of 31 March 2025. The remaining balance of the RCF is expected to be repaid through proceeds from other live sale initiatives that are progressing in parallel."

"The Company is also in advanced discussions on the sale of the remainder of the subsea cable business, AquaComms, and expects to report on further progress in due course. The valuation process has commenced in respect of the wider investment portfolio for the year ending 31 December 2024. InfraRed and the Board look forward to further engagement with shareholders as part of a roadshow in early 2025"

[duncansawalker] 20/12/2024 11:57

Im afraid I read that 'leakage' encompasses smart metering and they are gesturing to the 'benefits of smart metering' through past capital investments...

[tigerbythetail] 19/12/2024 11:13

"This in in addition to..."
There would seem to be two relevant budget lines here. One for leakage (which you quote) and other for smart metering.
Or not?

[duncansawalker] 19/12/2024 10:28

""We are also backing continued progress on reducing leakage and we propose targets that would represent a 17% reduction over 2025-30 (compared to the 2024-25 submitted baseline). Our final decisions allow English water companies to invest £717 million in leakage enhancement to reach these levels,using innovative smart technologies and better data. This is in addition to the benefits gained through significant funding of smart metering""
...from the Ofwat report this a.m. Not sure if this is good news or not...this is only ~140M a year for the entire industry...

[tigerbythetail] 19/12/2024 09:57

Well, my water bill is going up 53%.
Hopefully I can make some of that back on Arqiva's water meters here. But I can't find anything about water-metering so far in the press reaction to the Ofwat report.
Does anybody have any useful links?
I assume the drop today is linked (at least partially) to the wider market movements yesterday in the USA.

[tigerbythetail] 18/12/2024 17:48

That said, DGI9 is clearly worth more than 18p even if Arqiva turns out to be worthless!!!

[duncansawalker] 18/12/2024 12:46

All eyes on tomorrow's Ofwat's 2024 price review people, hopefully going to give us some clear direction on Arqiva...

[craigso] 14/12/2024 13:55

And that, I fear, is the last we'll see of 18p for awhile.

I hope to be wrong, of course, although any actual good news should see us skip through the high teens into the low 20s...

[craigso] 12/12/2024 10:11

Barclays cuts Digital 9 Infrastructure target to 25 (50) pence - 'equal weight'

This popped up on my II Broker ratings newsfeed. Anybody have access to the broker note? The suspiciously round numbers do look like somebody throwing darts at a board rather than doing in-depth analysis.

[tigerbythetail] 11/12/2024 14:22

Infra-Red now officially installed as DGI9 manager. Triple Point just a bad dream left behind in the past.

[craigso] 11/12/2024 12:12

Heavy selling? Volumes look low to me. And I doubt that investors who rode this all the way down to 15p are suddenly in a hurry to sell at 18p.

But I wouldn't be too surprised if a MIGO or AVI has decided that it's time to start building a stake. If you trust Infrared to fix this, a price target of 30p+ is not hard to justify.