Hicl Infrastructure Share Discussion Threads

[schofip] 18/7/2018 09:37

Specto sorry to sound like a broken record but, could w have made more probably, Could we have lost more very probably. I only ever lose sleep when I lose money not when I don't gain it.

[spectoacc] 18/7/2018 08:42

Those of us selling out are wrong so far. JLIF come off a bit, HICL got stronger.

@chucko1 - I can't claim any prescience whatsoever re the Brexit vote, but hadn't had a day like that since 2008 :)

[chucko1] 17/7/2018 13:45

@SpectoAcc - quite! Clearly I have lost a few memory cells the past years as I get increasingly decrepit.

In fact, I thought that might happen (certainly more than the 10% probablility implied by the betting markets), but could not execute anything at 8.00am. Some of the prices were truly dire and only managed to get bits and pieces during the morning.

Very quickly back onto PHP, the 105p NAV I was referring to is the EPRA NAV estimate for end FY 2018. The same figure was 91.1p FY 2016 and 100.7p FY2017. The EPRA NAV is the best one to use as it takes derivatives hedging etc. into account.

[spectoacc] 17/7/2018 13:01

@chucko1 - except for the day after the Brexit vote ;)

[schofip] 17/7/2018 10:53

I think we were all wrong footed by the political angle on HICL whether the risk is real or just vote grabbing bluster.

Despite trading a high value portfolio for over 10 years I would never consider myself in any way an expert and i am always very interested in what other people have to say on boards like this as it often highlights opportunities and threats I had not considered. I am also in 3inf, phnx.

I never stay permanently in any share. I tend to use the relative strength indicators and buy and sell based on overbought and over sold levels of 70/80% and 20/30%. I am sure there may be many flaws in this strategy but it has worked very well for me.

At the end of the day i am making good money and sleep soundly at night. Could I make more with a different strategy,probably. Could I lose more very probably.

[jonwig] 17/7/2018 10:09

apollo, chucko - as for the PHP NAV, choose your weapons: IFRS was 94.7p, EPRA 100.7p at 31/12.

There seems to have been a fair bit of fundraising since then, which might have lowered these figures temporarily (cash drag). For some reason I chose to buy AGR over PHP - LTV I think it was.

[apollocreed1] 17/7/2018 09:58

The Morningstar quote page states that PHP is on a premium of 28%. Is that figure wrong? If correct then seems very expensive.

[chucko1] 17/7/2018 09:41

@SpectoAcc - totally agree with your thoughts on avoiding large premia. This eneabled me to trade in and out of ESP a number of times as it approached 10% premium for a relatively new issue. I still have a large position which I am nursing back to health! I'm back in profit now, but that does include trading and dividends!

On PHP, they have a compounded return of 12.9% over 21 years. From recall, the NAV is circa 105p with a current share price of 115.6p (just gone ex-div), so a premium of 10%. They have very long leases on their properties and a div yld of 4.66% so a premium in this case is not such a large risk in the context of the quality of the enterprise.

If you are looking from some extra juice, try NRR. It's retail focused hence the stock's current malaise. But it's largely misunderstood and the 8% div yld and share price discount compensate adequately. The experience of the management is noteworthy.

[spectoacc] 17/7/2018 09:23

Agree with 2nd paragraph @schofip.

Trouble with first para is that when things do go wrong - as they inevitably do, one day - there's no "cushion". My own recent experience of HICL (initially bought at premium of c.6% vs 20%+ it had been trading at, but still a premium, and still fell to a discount) shows that. Also ESP (bought at par after it had been on a decent premium, including raising cash above NAV at 107p), and SQN, which fell from big premium to big discound. When a premium goes from eg +20% to -10% disount, as HICL did, that's a big capital loss despite very little having happened other than a change in sentiment to PFI. (I'm ignoring the Carillion collapse & subsequent small reduction in NAV!).

I don't want to pay more than the assets are valued at in the accounts, unless there's a clear reason to believe the accounts undervalue the NAV (true of some property co's). I'd much rather buy at a discount, even if greed frequently gets the better of me & I'm in too early.

Horses for courses tho - the likes of LTI and Aurora show expensive things can keep getting more expensive. I don't hold either mind ;)

(There's an argument HICL's assets are undervalued - the bid for JLIF shows that - but as everyone's pointed out, it's a brave punt on political risk).

[schofip] 17/7/2018 08:59

My take is, A high yield share trading at a high premium is a measure of its low risk factors. I am a fairly cautious investor so the stocks I pick generally are high yielding and at a high premium.

I am surprised in the offer for JLIF as I think there is high political risk. High risk coupled with a high premium does not tick the boxes for me. The announcement also made reference to the offer being subject to a "due diligence" exercise.
As for HICL counter bidding. I would suggest HICL are now looking for opportunities outside the UK and would not want to increase its at risk assets.

[spectoacc] 17/7/2018 07:19

@chucko1 - PHP appears to be on a large premium, not for me - have always regretted buying at premiums the rare times I've done it!

@jonwig - perhaps where HICL's recently traded puts you off, and in truth, how much upside is there from here? They're the most UK-focused of the listed ITs. Mind you - it's a decent yield, and has been throughout.

[jonwig] 17/7/2018 07:01

@ Spec - yes, I've read some suggestions, even that HICL might be a counter-bidder. (An all-share bid?) But to me the offer looks very generous - presumably a deterrent.

At 31/03:

HICL NAV 149.6p so current premium 1%.
JLIF NAV 121.9p so bid premium 17%.

So HICL should be a buy. Why aren't I convinced?

[spectoacc] 17/7/2018 06:47

@chucko1/jonwig - don't forget the possibility of a counter-bid on JLIF ;)

I'll have a look at PHP.

Entirely right re GRIO & interest rates - from memory, around 70% of income is index-linked, which helps a little. They want to be valued as per a Linker, but the regulatory shenanigans (which don't actually affect them too much, they've very little of the "doubling" stuff) shows that's not right.

[schofip] 16/7/2018 20:20

Good News. I am heavily into PHP as well and concur with your deliberation Chucko1.

[chucko1] 16/7/2018 17:34

@jonwig, everyone posting today appears to be similarly minded, to a degree. I guess we are expressing our intolerance of acute political/event risk determining cash flows rather than the more analysable economic performance of its assets.

[chucko1] 16/7/2018 17:24

@SpectoAcc, I agree with your caveats. In the case of ESP, however, it has been kicked until next week and I see a decent recovery happening right now. I have not actually followed GRIO, but at first glance, it does not look a pretty picture. My concern with ground rents is both regulatory (as you state) but also they have been seen to be ultra-defensive quasi fixed income instruments. Yields are rising and the 5.4% reduction in NAV follows directly from that. There was simply no fat in the yield when it was 3.0% a year ago. To what extent are these ground rents income-linked?

What I do like is PHP were I see little or no regulatory or political risk. They issued at 108p a few weeks back and I bought big into that at the 5% yield that was available. It's these sorts of alternatives that I would switch into with HICL up here. I made out only tiny on my HICL excursion, but I think I understand its risk/rewards and will trade it keenly. No stamp duty helps.

[jonwig] 16/7/2018 17:23

@ schofip - the JLIF caveat that the deal may not complete is a standard one in all preliminary announcements of t/o approaches. In this case the BoD seems to have endorsed it, hence the closeness of the share price to the bid value.

However, like yourself, I sold my holding in JLIF rather than hold out for the extra pence. Quite simply because I don't understand the rationale for such a premium. And I just can't begin to evaluate the UK political dimension.

Whether I'll use funds to buy back into HICL depends on how things develop.

[schofip] 16/7/2018 17:09

For not the first time I felt compelled to sell my entire holding in HICL today. Will hopefully be buying back at a lower price. Main reasons the JLIF announcement talked about a possible deal and the fact that the deal may not complete. Also the government is teetering in the edge at the moment with all that goes with it.A nice profit is never a bad thing.

[spectoacc] 16/7/2018 16:48

@chucko1 - agreed. But subject to two caveats - there's risk everywhere (on GRIO it's also regulatory, on the long lease property co's, or the likes of ESP, it's recessionary). And caveat number two - JLIF bid is at a decent premium to NAV!

But like you, I also took sold some HICL this morning, though at not much better than b/e before divis.

[chucko1] 16/7/2018 11:21

I am not sure the McDonnell issue is going away any time soon. May's Marr performance yesterday was sufficiently irritating to the Brexiteers that there will likely continue to be a cloud of uncertainty over her head - and the entire Conservative party and government.

On that basis, I took some off the table, though I would repurchase around where they were on Friday. At its current 5.11% div yield, it is not much cheaper than some alternatives that also provide long term index-linked income, although without the political risk (I do actually see this political risk being low in the long run).

[spectoacc] 16/7/2018 08:26

JLIF possible bid appears to be at well over NAV - about time the sector stopped trading at a discount, with long-term* index-linked income.

(*Assuming no McDonnell at no.11).

[le4r] 16/7/2018 08:21

Nice response to the JLIF news... let's see if it holds now

[skinny] 11/6/2018 07:01

Incremental Acquisition

HICL Infrastructure Company Limited ("HICL" or the "Company"), the listed infrastructure investment company advised by InfraRed Capital Partners Limited ("InfraRed"), is pleased to announce that it has agreed to acquire a further 7.2% interest in the A63 Motorway concession (the "Project") in France for €62m from funds managed by DIF Infrastructure III and DIF Infrastructure IV. The acquisition is not subject to any further conditions and will complete by the end of this month.

The Project is a 40-year toll-road concession to design, upgrade, finance, operate and maintain a 104km section of the existing A63 between Salles and Saint-Geours-de-Maremne, in southwest France. Financial close occurred in 2010 and the upgraded road opened in 2013. HICL acquired an initial 13.8% interest in the Project in January 2017 and, with completion of this incremental investment, will hold a 21% interest in the Project.

The consideration is in line with the carrying value of HICL's existing investment in the Project as at 31 March 2018. It will be funded from the proceeds of the disposal of the Highland Schools PPP2 Project, which was announced in April 2018. The acquisition exemplifies an ongoing strategy of portfolio optimisation for the Company. It is accretive to the existing portfolio, particularly in terms of total return and cashflow longevity.



-ends-

[losos] 31/5/2018 21:27

SpectoAcc - "Chunky for me & you Mister MD :)"

And me haha. HICL is one where I would normally top up from time to time but nervous about the political situation not that I take a great interest now, one problem being the age I am is that I've heard it all before, it irks me when I hear politicians blabing on about something when I can well remember the same (or virtually the same) being said half a century ago !!!