CQE 1.04% $2.85 charter hall social infrastructure reit

stronger aud ensures divs of 32 pc

  1. DSD
    15,757 Posts.
    Current AEU SP is 28c. Last year the company issued divs of 12.3c/share. Since then AEU have issued more shares and bought more child care centres. AEU management have predicted divs to be 9c/share for FY09. But that forecast was made when AUD was falling like a stone. In past 10 days the AUD has rallied from 60c to just on 70c today. A gain of 16.5%!
    AEU owns the freehold of aprox 450 child care centres. Many were bought at bargain basement prices back in 2003. The centres have over 99% occupancy and mostly with 15 yr leases. The rent is increased by CPI (aprox 4%) each year. The demand for child care is growing as number of babies born is highest ever and the Fed govt has increased C.Care subsidy from 30-50% from July 08.
    AEU has decided to drastically reduce its expansion and will end up with about 460 centres around Australia. The book value (see company ann. August 08)for the centres is $1.49/share!! Over 5x the current SP!! The SP fell heavily during past 4 months when AUD collapsed from 98c to 60c. This is because AEU has a US$262m loan and repayments had increased. But 77% of loan has a currency hedge. Stk was way oversold in the october panic. Anything below 37c will provide a dividend of 25%. Divs are unfranked but distributed each qtr rather than half-yearly. This prevents substantial falls in SP each time it goes 'ex-dividend.'
    I am bullish re AUD despite the fall in base metal prices. Our economy is in far better shape than USA. My forecast is:
    2009 Divs 10c
    2010 Divs 12-14c
    DYOR but am confident the SP will recover strongly from crazy oversold situation. My target SP is 47c.
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