Asian Pay Television Trust (APTT)

[CY09]

hi CY09,

APTT's share price in 2020 = 0.13cents
APTT's share price in 2024 = 0.08cents (loss of 5cents or ~40%)
APTT's total dividends paid in the last 5 years = 0.05cents
APTT's TSR over the last 5 years = (0.08-0.13)+0.05 = 0

If we assume a WACC of 2% per annum, it means we would have lost 10% (or we can think it as opportunity costs)

On hindsight, Mr Market has been remarkably correct over the last 5 years. In the absence of an external crisis and very clear numbers for all to see (ie. the low payout ratio), it is puzzling that Mr Market continues to give it a 12-13% yield.

What are things that Mr Market may have seen but remains unseen by OPMIs like us?

It is the refinancing risk Mr market is worried about where debt facility ends 2025. 

I don't view this as a too high of a risk as compared to what the market perceives, let's see the answer 1 year from now. Till then APTT pricing will remain depressed

[weijian]

hi CY09,

APTT's share price in 2020 = 0.13cents
APTT's share price in 2024 = 0.08cents (loss of 5cents or ~40%)
APTT's total dividends paid in the last 5 years = 0.05cents
APTT's TSR over the last 5 years = (0.08-0.13)+0.05 = 0

If we assume a WACC of 2% per annum, it means we would have lost 10% (or we can think it as opportunity costs)

On hindsight, Mr Market has been remarkably correct over the last 5 years. In the absence of an external crisis and very clear numbers for all to see (ie. the low payout ratio), it is puzzling that Mr Market continues to give it a 12-13% yield.

What are things that Mr Market may have seen but remains unseen by OPMIs like us?

It is the refinancing risk Mr market is worried about where debt facility ends 2025. 

I don't view this as a too high of a risk as compared to what the market perceives, let's see the answer 1 year from now. Till then APTT pricing will remain depressed

Hi CY09,

As previously mentioned, I have observed that good companies tend to make you money even though you may be wrong, while the not-so-desirable ones tend to make you lose money even though you may be right.

You are probably right that the refinancing risk is low. And I also believe so, because since I held APTT back in 2005 (under MIIF), it never managed not to (refinance). But been right and making money are another tings.

Is Mr Market actually pricing in another rights issue to further pay down debt? Or will the refinancing be on very different terms (ie. the loan will be more amortizing then the previous one/s)?

On paper, the dividend payout wrt to FCF "looks conservative" because the bulk of FCF is been used to pay down debt. But if we look at it from another standpoint -  Because the amt. of dividends is small wrt to debt payment, any debt refinancing condition change will have a big impact on amt. of dividends been paid out.

[weijian]

APTT recently announced its 3Q24 results and put some color into its refinancing activity which is happening in the next 6-9months.

REPORT SUMMARY

In addition, TAIBOR rates have doubled since December 2021 when the Trustee-Manager extended the Onshore Facilities by three years. Depending on the outcome of the refinancing of both Onshore and Offshore Facilities, and our hedging programme beyond June 2025, distribution could be adjusted in 2026. Upon  completion of refinancing slated for mid-2025, subject to no material changes in planning assumptions, the Trustee-Manager should not have to revisit borrowing facilities, both onshore and offshore, for at least three years, providing greater visibility to debt servicing commitments and cash flows

3Q24 report: https://links.sgx.com/FileOpen/APTTUpdat...eID=824807

Since the refinancing was done in 2021, I looked back to 2021 and saw a "write-off" of financing expenses. In essence back in 2021, APTT had amortized its refinancing expense over 7years but when refinancing was done in 3years, the remaining cost had to be written off. Ditto 2025. To me, this looks like really aggressive accounting. God knows how much "aggression" is applied to other areas.

Question: What is the nature of the amortisation expense? It seems to be a bit more one-off in nature.
Answer: Because we refinanced the onshore facilities in Q4 2021, under the accounting standards, we had to write off the unamortised arrangement fees from the previous refinancing. It is a one-time hit, not a cash hit, as we had paid those arrangement fees in 2018.

Question: At the same time, you have new arrangement fees under the recent refinancing. How would that be reflected? Or has that been paid out?
Answer: Yes, we paid the arrangement fees in cash during the refinancing at 31 December 2021. The amount will be amortised over the next 7 years.

Q4 2021 Results Briefing via Zoom on 25 February 2022 at 8am
https://links.sgx.com/FileOpen/APTTQ4202...eID=705716