Asian Pay Television Trust (APTT)

Look at this joker, trading at 17 cents today. Dont know what has happened but rushing off to work, will check it out tonight

What happened at APTT is not an uncommon narrative of business trusts in Singapore.

1. Sponsor sells asset to trust, with trust taking high leverage to finance the purchase.
2. Trust pays out as much dividends as it can while ignoring the debt burden.
3. After some time, trust starts to receive less income as quality of asset and/or business environment deteriorates.
4. Bankers get worried and increase requirements on (or refuse) refinancing.
5. Trust cuts dividends to pay down debts. Share price adjusts accordingly.

If a business takes on large debts, you have to be very sure that its business is strong enough to ensure stable cashflows, or that the business is attractive enough for it to be offloaded when it can no longer service its debts. Usually a business has either both or neither of these qualities.

For those tracking APTT's ARPU, the operating issues that they face should be quite clear to see.

Seems like there is a 80% reduction in distributions starting from 4Q18. The 1.2cts/year seems to be the real sustainable cash flow (although still supported by leverage) that can be paid as dividends since Mgt guided that CAPEX will be "self funded" now.

APTT has been paying a large distribution to Unitholders for as long as it could; New distribution guidance in 2019 and 2020 to reposition APTT for the future

Over 43 cents per unit in distributions declared since IPO (including Q3 2018 distribution)
• The 20 declared distributions totalling 43.305 cents per unit translate to almost 45% of IPO listing price
• 3-year distribution record:
FY2016: 6.5 cents per unit
FY2017: 6.5 cents per unit
FY2018: 5.175 cents per unit (including Q4 2018 distribution guidance of 0.30 cents per unit)

Pay more conservative distributions to Unitholders so that all capital expenditure (including growth capital expenditure) can be self-funded from 2019
• The distribution is expected to be 1.20 cents per unit for 2019 and 2020, subject to no material changes in planning assumptions
• It is anticipated that the distribution will continue to be paid quarterly
• The new distribution level will be implemented from Q4 2018; Q4 2018 distribution will be prorated to 0.30 cents per unit

http://infopub.sgx.com/FileOpen/APTTPres...eID=533804 (3Q18 results ppt slide26)

(19-03-2015, 09:21 AM)valuebuddies Wrote: Interesting report from a young chap

http://www.nextinsight.net/index.php/sto...-with-sell

Looks like even the most bearish analysts were too optimistic

(14-11-2018, 01:28 PM)weijian Wrote: Seems like there is a 80% reduction in distributions starting from 4Q18. The 1.2cts/year seems to be the real sustainable cash flow (although still supported by leverage) that can be paid as dividends since Mgt guided that CAPEX will be "self funded" now.

Even at 1.2 ct/year seem attractive - this is 7.5% yield at 16 ct price.

(14-11-2018, 01:59 PM)hh488 Wrote:

(14-11-2018, 01:28 PM)weijian Wrote: Seems like there is a 80% reduction in distributions starting from 4Q18. The 1.2cts/year seems to be the real sustainable cash flow (although still supported by leverage) that can be paid as dividends since Mgt guided that CAPEX will be "self funded" now.

Even at 1.2 ct/year seem attractive - this is 7.5% yield at 16 ct price.

Might be hard to foresee if 1.2 cts / yr is sustainable beyond 2020, perhaps requiring EBITDA to keep up at current levels. The ARPU thus far has been in constant declines

(14-11-2018, 02:34 PM)wonghw12 Wrote:

(14-11-2018, 01:59 PM)hh488 Wrote:

(14-11-2018, 01:28 PM)weijian Wrote: Seems like there is a 80% reduction in distributions starting from 4Q18. The 1.2cts/year seems to be the real sustainable cash flow (although still supported by leverage) that can be paid as dividends since Mgt guided that CAPEX will be "self funded" now.

Even at 1.2 ct/year seem attractive - this is 7.5% yield at 16 ct price.

Might be hard to foresee if 1.2 cts / yr is sustainable beyond 2020, perhaps requiring EBITDA to keep up at current levels. The ARPU thus far has been in constant declines

Those who never sell will trap die die, today 50% drop.....

(14-11-2018, 01:28 PM)weijian Wrote: Seems like there is a 80% reduction in distributions starting from 4Q18. The 1.2cts/year seems to be the real sustainable cash flow (although still supported by leverage) that can be paid as dividends since Mgt guided that CAPEX will be "self funded" now.

APTT has been paying a large distribution to Unitholders for as long as it could; New distribution guidance in 2019 and 2020 to reposition APTT for the future

Over 43 cents per unit in distributions declared since IPO (including Q3 2018 distribution)
• The 20 declared distributions totalling 43.305 cents per unit translate to almost 45% of IPO listing price
• 3-year distribution record:
FY2016: 6.5 cents per unit
FY2017: 6.5 cents per unit
FY2018: 5.175 cents per unit (including Q4 2018 distribution guidance of 0.30 cents per unit)

Pay more conservative distributions to Unitholders so that all capital expenditure (including growth capital expenditure) can be self-funded from 2019
• The distribution is expected to be 1.20 cents per unit for 2019 and 2020, subject to no material changes in planning assumptions
• It is anticipated that the distribution will continue to be paid quarterly
• The new distribution level will be implemented from Q4 2018; Q4 2018 distribution will be prorated to 0.30 cents per unit

http://infopub.sgx.com/FileOpen/APTTPres...eID=533804 (3Q18 results ppt slide26)

Isn't this better than Sabana? As management are upfront in revealing their reduced DPU and prudent management in meeting their debt in the future.

Just looked through its balance sheet, imo, it is in a terrible state with its high debt, 1.2 cents is probably sustainable in the next 2 years, but probably have to be cut further after that. What is worse is that in the interim, it may even raise money through a rights issue, so you may earn the 2.4 cents but you have to fork out more than that for the rights to maintain the same ownership of the company, not such a good deal. I would stay far far away from it.

haha just thought it would end up little different from Hyflux, well, i may be too pessimistic, but it is really unnecessary to bet on this counter even at today's share price, there wont be much upside unless some BB wants to push it up to make me look stupid

(16-11-2018, 10:33 AM)money Wrote: Just looked through its balance sheet, imo, it is in a terrible state with its high debt, 1.2 cents is probably sustainable in the next 2 years, but probably have to be cut further after that. What is worse is that in the interim, it may even raise money through a rights issue, so you may earn the 2.4 cents but you have to fork out more than that for the rights to maintain the same ownership of the company, not such a good deal. I would stay far far away from it.

haha just thought it would end up little different from Hyflux, well, i may be too pessimistic, but it is really unnecessary to bet on this counter even at today's share price, there wont be much upside unless some BB wants to push it up to make me look stupid

I agree with u on this. That's why i disagree with what ASSI/AK71 said on his latest post on APTT. if you value it purely on the expected 1.2 cents yield, then yes its still ok. but its a HIGHLY geared yield play. To me this counter need to drop another 20~30% to be worth the risk.