BBI 0.00% $3.98 babcock & brown infrastructure group

all brokers say buy

  1. 6,136 Posts.
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    every broker report rates this a but, com sec notes very much the same, as were 2 other brokers i can mention.

    see today daily email from intersuisse as a fine example- ***link valid for today only **** 5th march Notes.pdf

    Babcock & Brown Infrastructure Group BBI Wednesday 5 March 2008
    Debt profile long-dated and hedged – Opportunity from indiscriminate selling
    Recommendation: Buy for strong double digit yield

    Investment Rationale
    BBI is a stapled security over a trust containing transport and energy
    infrastructure assets and the company which manages the trust. The stock´s
    cash yield is high; distributions are fully tax-deferred but reducethe investor's
    cost base for capital gains tax purposes. Distributions are likely to remain tax-
    deferred for at least two to three years. They are paid out of a reliable and
    diversified stream of operating cash flows from regulated infrastructure assets
    with stable market shares. The
    re are no distributions from revaluations,
    regearing, refinancing or restructuring. BBI is highly geared and we expect
    more capital raisings as further suitable infrastructure assets are found –
    Babcock & Brown has proven expertise in finding and negotiating income-
    generating assets. Rising bond yields would increase interest expense,
    although the effect is not strong. A high-yield albeit slow-growth investment.

    The Result
    ($m) 1H07 1H08 % Chg
    Revenue 1,016.7
    601.3 +69.1
    EBITDA 319.7
    251.6 +27.1
    EBIT 178.0
    163.6 +8.8
    NPAT -14.6
    -35.4 na
    EPS -0.7c
    -2.6c na
    Interim Tax-Def. Distribution 7.5c
    7.0c +7.1

    Event The interim distribution was tax-deferred and guidance remains for at
    least the 2H08 and FY09 distributions to be fully tax-deferred. There was no change to the guidance for full-year distributions of 15.0¢,
    implying a 2H08 distribution of 7.5¢, and for FY09 distributions of 16.0¢.
    The guidance assumes no material adverse change to key tax and
    regulatory environments, and completion of the expansion of Dalrymple
    Bay Coal Terminal in line with schedule. This looks well on track with the
    announcement yesterday that DBCT Phase 1 is complete. This increases
    capacity from 59Mtpa to 68Mtpa; Phase 2/3 should complete next year
    bringing this to 85Mtpa.

    Impact After all the acquisitions, capital raisings, debt and fees, security holders
    will get only a one-cent increase in full-year distribution next year. The
    appetite for BNB to grow assets under management, including using its
    satellite funds such as BBI, ensures a sound growth pipeline but puts a li
    on growth per security. The recent sell-off in BBI securities, due to aversion to entities with a deb
    profile, is not justified. Just 10% of BBI’s total debt matures in the next 18
    months. The debt predominantly backs regulated assets and assets whic
    have strong monopolistic cash flows. BBI has hedged 93% of its debt in
    the short term and 86% of its debt is hedged to December 2009.

    Recommendation Impact
    If BBI delivers, by the end of FY09 it will have compounded the distribution by
    6.5% pa since FY06 inclusive. The diversity of the quality portfolio gives
    stability and long-term income-seeking investors have an opportunity to lock in
    an excellent yield at current prices. Buy for a strong double digit yield.

    Business Description
    Babcock & Brown Infrastructure (BBI) is a specialist
    infrastructure entity which holds and manages a
    diversified portfolio of assets. Primary investment
    strategy focuses on acquiring, managing and
    operating quality infrastructure assets in Australia and
    internationally. Some 50% of income is from Transport
    Infrastructure and 50% from Electricity Transmission
    & Distribution (mostly ex-Alinta). BBI is managed by
    Babcock & Brown Infrastructure Management Pty
    Limited (BBIM), a subsidiary of Babcock & Brown
    Limited (BNB), which holds an interest of 8.1% of BBI.


    0417 GMT [Dow Jones] Babcock & Brown Infrastructure Group (BBI.AU) down 7.5% at
    A$1.05, despite positive news that first of its three-phase expansion of the Dalrymple
    Bay Coal Terminal has been completed, with analysts saying nothing to suggest
    there's problems with remaining ramp up planned by end of 2008. "There may be
    some stories going around that the stages 2 and 3 are delayed but we queried BBI around
    that and they said no, definitely not, it's all on target," said Matthew
    Spence, an infrastructure analyst at Merrill Lynch. Suggests more industrywide factors at
    play after Asciano Group (AIO.AU) warned Monday an economic slowdown may hurt its ports
    and rail business next year, with "cyclical names" such as AIO, off 17%, BBI,
    which is down 7.5% and Macquarie Airports (MAP.AU), down 5.7%, "the ones getting
    slammed today." (WEL)

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