MIIF - What is left after APTV?‏

- Better asset divested

- 1Q13 results were mixed; outlook not so clear

- Distribution targets in place

Here is a brief look at MIIF after the APTV divestment.

APTV divestment
After completing its Strategic Review in Dec 2012, the board of Macquarie International Infrastructure Fund (MIIF) decided to divest its 47.5% stake in Taiwan Broadband Communications (TBC) to a new business trust, Asian Pay Television Trust, for a consideration of about S$522.1m. This amount will be distributed to shareholders in either cash (for those who elected to receive cash) or shares in the new entity (APTV).

What is left after ATV
After the divestment of ATV, MIIF still has three assets remaining on its books: Changshu Xinghua Port (CXP), Hua Nan Expressway (HNE) and Miaoli Wind. As at 31 Mar 2013, the three assets are valued at S$245.6m.

Here is some brief info on the assets and recap of 1Q13 performance:

Changshu Xinghua Port (CXP – valued at S$106.6m)
CXP is a multi-purpose cargo port centrally located within the Yangtze River Delta industrial zone, a high-growth industrial region which includes the cities of Suzhou, Wuxi and Changshu. CXP’s hinterland (land or district behind a coast or the shoreline of a river) is one of China’s fastest growing industrial regions.

1Q13 performance:
- Revenue grew 7.3% YoY to CNY76.9m; EBITDA +10.0% to CNY34.0m

- Top-line growth largely due to increases in log and paper/pulp volumes, which helped to offset a drop-off in steel and other non-steel related volumes

- Management expects strong performance in 2013 with continued growth in log and paper/pulp volumes

Hua Nan Expressway (HNE – valued at S$139.0m)
HNE is a 31-kilometre dual-carriage urban toll road in the city of Guangzhou, the capital of Guangdong province in China. It is the main artery for north-south traffic in Guangzhou, enabling easy access to south China and is intersected by eight expressways and urban arteries, ensuring excellent connectivity.

1Q13 performance:
- Revenue fell 15.6% YoY to CNY115.8m; EBITDA -19.1% to CNY90.8m

- Standardisation of toll rates and free travel during public holidays caused revenue to fall

- Management deems outlook to be positive as the highway is expected to benefit from increasing car ownership in Guangdong province

Miaoli Wind (valued at zero; investment had been written down to zero)
Miaoli Wind owns and operates 25 wind turbines with a combined capacity of 49.8MW, at two sites in Miaoli County, Taiwan. Miaoli Wind generates revenue by selling its entire energy production to Taipower under a 15 year fixed tariff PPA (one agreement per wind farm site) with an option to extend each PPA for an additional five years. The fixed tariff is NT$2.00 / kWh.

1Q13 performance:
- Revenue declined 11.4% YoY to NTS$86.9m; EBITDA -17.9% to NT$70.2m

- Energy production was lower due to lower wind speeds during the quarter

- Higher operating costs related to the extension of debt repayment date was the main reason why EBITDA fell

- The amount extended was for senior debt of NT$440m, which was due Dec 2012. It has since been extended to Jun 2013 by its lenders.

- For the ongoing debt obligations, it is non-recourse to MIIF

Targets for FY13
Management has stated that it intends to distribute existing excess cash to shareholders in the form of a special dividend of 3.00 cents per share. It has also set a dividend guidance with an interim dividend of 0.7 cents and final dividend of 1.2 cents.

According to Bloomberg, there are currently 1 BUY and 3 HOLDs on the counter with an average target price of S$0.67. (It is trading at S$0.18 at the moment).

We DO NOT have a rating on MIIF.

Source : OCBC Research

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