Gcp Infrastructure Inves... Share Discussion Threads

[panshanger1] 07/8/2023 16:07

Any thoughts on the sustainability of the dividend here ?

[spangle93] 28/7/2023 08:13

They also seem a bit more investor-friendly than some companies...

The Board, and Gravis, are available to meet with the Company's shareholders at any time. A capital markets day is being scheduled for October, which investors would be welcome to participate in.

Following the release of the 30 June 2023 NAV, Gravis will be holding a webinar on Tuesday 1 August at 11am.

[jonwig] 28/7/2023 07:57

Company update:



Increased discount rate and lower power prices shave a bit off the NAV, but no company-specific issues.

Also dividend 1.75p, xd 10/08, pay 13/09.

[jonwig] 21/7/2023 16:28

NED buys nearly 60,000 shareshttps://www.investegate.co.uk/announcement/rns/gcp-infrastructure-investments-ltd--gcp/director-pdmr-shareholding/7647954

[ec2] 19/7/2023 16:49

Borne out in today's price action are the points made in my most recent posts on this thread. 1) Post 634 That investors need to look beyond short term interest rate expectations and look at what's on the other side. 2) Post 550 That the present interest rate paranoia was throwing up opportunities in long duration assets. Turning the corner on interest rate rises is still some way off but today's share price rises particular across real assets gives an insight into how these asset prices could suddenly take off when investors become more forward looking. I think when investors in 18 months time look back at certain current real asset prices they will realise what a great once in a lifetime buying opportunity existed.

[jonwig] 14/7/2023 08:59

The danger is that they could be taken out at a discount to NAV. (CSH was, recently, at 80p.) Some of us paid 100p for our shares.

[spangle93] 14/7/2023 08:48

Thanks to cocopah on the SEQI thread



London's infrastructure and renewables trusts face growing chances of 'predatory activity'

Stifel noted that the biggest discount in the infra sector is at GCP, at around 30%, followed by HILC at 21%, Pantheon Infrastructure PLC (LSE:PINT) and Sequioia at 18%, INPP at 17%, BBGI Global Infrastructure at 11% and 3i Infrastructure PLC (LSE:3IN) the smallest at 6%.

[kev0856153] 13/7/2023 07:34

Get some reci while you are at it. Buy.

[kev0856153] 13/7/2023 07:31

It's all about the income fellas. There's a dividend announcement due in 2 weeks. Buy.

[donald pond] 13/7/2023 06:19

An easier target would surely be for ofcom to challenge all the mobile companies who increase fees by RPI+ each year? If everyone's costs are rising, wages need to rise. To ask for people to see their living standards drop by 10% isn't realistic. This was always supply side driven inflation and it needs to be dealt with on that side. There aren't the wages to cut: the share of the economy going to income has been dropping for decades.

[spectoacc] 12/7/2023 10:20

Lol @fordtin - that reminded me of that chain email along the lines of "you get 52 weeks of weekends - 104 days. You get 8 bank holidays. You get 6 weeks of holiday. You have an average of 2 weeks off a year sick" etc that eventually comes to the conclusion you don't actually work at all :)

Higher wage settlements cause higher inflation, other things being equal (the main one being productivity of course). OK, forget the demand side (only mentioned public sector because so many of them aren't even in the figures yet), and consider that if a co has to find another avg 7.3%, it tends to put the cost onto prices, rather than coming out of margins.

Car insurance for eg has gone up ridiculously, yet think of the labour cost of repairs

Until wage settlements are down, inflation isn't going sustainably to 2%. The only way I can see to get wage settlements down is to get unemployment up, via recession. The only question then is whether interest rates are at recessionary levels already (I think they're close, but transmission's taking longer).

[Edit - or to take the public sector pay argument further, why not give them all 200% wage rises? Think of the knock-on to the private sector].

[jonwig] 12/7/2023 10:10

fordtin - good description of the multiplier effect at work!

I'm also not convinced of the strong inflationary effect of public sector wage rises. In fact, of course, this is their unions' basic argument. However, even though much of the wage rise returns to the government, its own spending commitments are mostly inflation-linked. So your apparent benefit gets lost in the grinder.

The key thing is the government borrowing requirement (and inflation-linked gilts are still a feature of its current borrowing as well as being a quarter of total gilts issuance).

The government is certainly concerned whether the appetite for UK gilts will weather other factors. The BoE is selling some of its gilts, and if pension funds can be steered into long-term infrastructure projects, they will buy fewer gilts.

[fordtin] 12/7/2023 09:57

Are public sector pay rises really a problem?


“The average salary for a Doctor is £76,300 gross per year”


If UK Gov gives an average doctor a 10% pay rise of £7,630

UK Gov takes back 40% income tax plus 2% employee’s NI, leaving £4,425.40 for the average doctor and £3,204.60 returned to UK Gov.

The average doctor spends the £4,425.40 and pays 20% VAT. Resulting in £3,540.24 to the retailer and another £885.08 returned to UK Gov.

The retailer makes a 20% profit on the products sold to the average doctor, resulting in £708.05 corporation tax to UK Gov.

The retailer’s wage bill absorbs 25% of the £3,540.24. Of the £885.04 paid in wages, employees’ tax, employees’ NI & employer's NI, result in another £221.23 being returned to UK Gov.

The retailer’s staff demand a wage rise .... increased employees' tax & NI, plus employer’s NI , result in 45.8% of employees’ wage rise going to UK Gov.

The retailer’s employees spend their wage rise on petrol, cigarettes & alcohol and pay 20% VAT plus an obscene percentage of petrol, alcohol and tobacco taxes to UK Gov.

The retailers of the employees' purchases pay corporation tax ............... and so on.


Also factor in taxes & NI throughout the chain from exploration for raw materials, extraction, transport & processing. Then component manufacture, transport of components to final product assembly, transport between various storage depots, until it eventually arrives at the retailers.
Net result; UK Gov claws back most of the average doctor’s pay increase.

[kinbasket] 12/7/2023 08:46

If one third of the workforce is the public sector getting 6% and the target is 2% then all workers in the private sector need to be awarded 0% to make the maths work.

Except there is little evidence that public sector pay effects inflation. The wage spiral theory doesn't work well if there is no end product. The gubmint can't increase prices to cover higher wages. It could be argued the increased cost will come in the form of higher taxation. Depending on how that lands it could be deflationary.

[donald pond] 12/7/2023 08:12

But wages in general have been lagging behind their trend rate for a long time. If low inflation means that normal people must get poorer and poorer that cannot continue indefinitely. And if benefits are riding in line with inflation and wages are not, the incentives are all wrongThe truest line in investment and economics is Mungers "you tell me the incentives and I'll tell you the results".

[cc2014] 12/7/2023 07:46

Average pay in the public sector rose by 5.8pc in the three months to May, according to the Office for National Statistics (ONS), the fastest quarterly growth seen since 2001.

Rishi Sunak has indicated that he was willing to ignore recommendations for public sector pay rises of up to 6.5pc, saying in recent weeks that workers “need to recognise the economic context we are in”.


If one third of the workforce is the public sector getting 6% and the target is 2% then all workers in the private sector need to be awarded 0% to make the maths work.

Inflation is embedded now. Getting it down will require workers negotiating power to be significantly reduced and that requires unemployment up. And that doesn't win elections. Awarding 10% rises to pensioners does.

[spectoacc] 12/7/2023 06:53

@kinbasket - interesting points.

You're right that wage rises are well behind inflation of course - consumer spending holding up due to spending savings (particularly Covid savings) and re-emptying the CC (also paid down during Covid). Are reasons why I think rates don't need to go much higher to cause the necessary recession.

But a recession is necessary IMO - 6-7% rises now entrenched (some public sector yet to even get theirs), and no way that's conducive to 2% CPI. 3-4% avg wages inc bonuses at most..

Also got to consider that interest rates are miles behind inflation too.

Most people thought when the cost-push rises fell out after 12 months, we'd have much lower inflation. But we haven't. Factory gate prices now at pre-invasion levels; gas given back the spike; petrol's not expensive anymore (except at Asda), more than a year on from the gas spike.

What was the 70's has become the 90's, with only a rates-induced recession to end wage-price. That's where I'm at, until data says otherwise, but I do think rates are nearly high enough already, and will peak at 5-something. That's my (so far wrong) bet on GCP & others.

[brucie5] 11/7/2023 17:05

Thanks to Kenmitch for alerting me to this note from Feb, which some may find worth a re-read:

[kinbasket] 11/7/2023 16:57

I also fear it may break but

"Inflation will fall, but wage/price is now entrenched, and only something early 90's is going to stop it."

I'm not sure it's as simple as this. I think there is a lot of nuance in the employment numbers that muddies the water. Brexit/labour withdrawal etc. Also, wage rises are running behind inflation so people are net poorer. So wage inflation to date only supports the new price environment it doesn't increase it further. Inflation can fall, wages can stagnate and we stay where we are in a newer higher priced world. The key there is "to date"

Studies show wages have little effect on inflation but inflation has significant effect on wages. i.e. inflation is the leader. (As usual there are plenty of studies which disagree) However, I think this time, since inflation was a supply problem, and rapid, it's a leader to wage inflation and the effect will be limited. But my opinion is worth what you're paying for it.

[spectoacc] 11/7/2023 16:39

Then it's going to break I fear.

The monetarists are wrong IMO. Inflation will fall, but wage/price is now entrenched, and only something early 90's is going to stop it.

(Or looked at another way - there's a danger of a generation not believing the BoE when it says it will keep inflation at 2%).

[kinbasket] 11/7/2023 16:30

DP said..

"I was just making the point that at base rates of 6% investment will stop. Not just for GCP, but for the whole country. So they cannot stay there for long."

Amen. A point the previously mentioned Hugh Hendry made recently on one of the Fin tv channels. We have built a system (whether by design or accident) that cannot survive without near zero rates. When or how we get there can be debated ad nauseam but we have to go there or it breaks.

[donald pond] 11/7/2023 15:00

I think there's lots of value here. I was just making the point that at base rates of 6% investment will stop. Not just for GCP, but for the whole country. So they cannot stay there for long.

[brucie5] 11/7/2023 14:38

Donald, forgive me for being slow: does this mean you are bearish on GCP; or see it as value at these levels?

The financial statement from June is worth reading, I'm sure you have. And includes the following line under 'final thoughts'.

"With long-term gilt yields at the same level as when the Company was launched
in 2010, the investment proposition remains as compelling as ever."

But now of course at >33% discount to NAV.