Macquarie International Infrastructure Fund

[tanjm]

I think the shares are immediately cancelled. No treasury shares

[Nick]

Thanks Tanjm...you are right. Thanks for pointing out my mistake.

I wonder why are they doing it ?

[Nick]

Latest set of AGM presentation slides containing quite a fair bit of information about the Trust's post IPO performance and its plans for the future.

http://info.sgx.com/webcoranncatth.nsf/V...B001803D5/$file/MIIFAGM2011Preso.pdf?openelement

[Nick]

MIIF purchased 650,000 shares at $0.61 per share today. Perhaps, more business trusts should learn from MIIF and repurchase their units when they feel its under-valued instead of seeking management-fee accretive acquisitions at the wrong time.

[lonewolf]

I think MIIF is an unique position compared to the rest of the business trusts. It has divested its non-Asian assets and is now sitting on a pile of cash of $150 million which it is unable to invest in viable business.

By its own admission, it evaluated >60 opportunities and submitted bid for 2 but was unsuccessful due to pricing.

Which other biz trusts is in the same position?? The answer is none.

[Drizzt]

but it doesn't benefit share holders to be sitting on cash.

it benefits shareholders if you have a manager that evaluates wisely and not buy overvalued things.

looking at the share buying there is not much point buying back 6 million shares if the float out there is in billions

[Nick]

MIIF did make a $316 million acquisition in the previous month (pending approval) to increase its stake in TBC by purchasing shares from a fellow investor while injecting capital to reduce TBC gearing via a private placement. Extremely yield accretive judging by the proposed DPU payouts.

I originally too had this illusion that MIIF never made good acquisitions but a list of its divestment history points to pretty good deals made in the past. Of course, this was done in the booming 2005 - 2007 era when credit was cheap. It's a whole new world today so the rules have changed and it remains to be seen whether MIIF have adapted its game to keep on winning.

The share buy back schemes allows MIIF to repurchase 10% of the float or around 120 million shares. If they paid an average price of 65 cents per share, it works out to 78 million and unit-holders immediately get a 10% accretion in their DPU. I doubt MIIF will proceed in that direction but by showing that they have no qualms about repurchasing units (and forgo management fee) does help unit-holders in 2 ways - i) creates goodwill and ii) support the unit price.

MIIF should take its time to evaluate where it wishes to spend the remaining cash kitty. Personally, I would much rather they use to to deleverage HNE. Not sure how HNE will be able to afford to repay its loans without reducing the distribution when large amortization kicks in. The concession period is fixed so u can't just roll it over. This is something that bugs me.

(Not Vested)

[Nick]

MIIF purchased 1.9 million shares at $0.6096 today. They have 1.286 billion shares outstanding.

[Nick]

MIIF recently released its 1Q 2011 report and reaffirmed its 1H 11 DPU guidance of 2.75 SG cents per share which gives rise to an annualized yield exceeding 9.4%.

http://info.sgx.com/webcoranncatth.nsf/V...C0057BE8F/$file/MIIFQ12011Results.pdf?openelement [Press Release]

http://info.sgx.com/webcoranncatth.nsf/V...C0057BE8F/$file/MIIFQ12011SGXReport.pdf?openelement [SGX Report]

http://info.sgx.com/webcoranncatth.nsf/V...C0057BE8F/$file/MIIFQ12011Preso.pdf?openelement [PPT Slides]

MIIF continues to repurchase shares from open market. It has repurchased 20.877 million shares so far this year. The current stock float has declined by 1.6% to 1,276,927,154. MIIF would still have in excess of $100 million cash in its balance sheet to undertake M&A or share buy backs. Alternatively, it can choose to shore up the balance sheet of its existing asset - TBC or CXP.

It must be noted that HNE is a concession asset hence its valuation will dip to 0 in 2026. This means that its RMB 2.6 billion loan will have to be repaid by then. MIIF has uploaded the debt repayment profile in its PPT slides and we can see a surge in loan amortization post 2013. If HNE projected double digit IRR doesn't materialize, the distributable income may drop. 1Q results are stable. I guess the main positive thing is the sharp increase in Maoli Wind revenue and EBITDA.

(Not Vested)

[Nick]

http://kfc1973-stock.blogspot.com/2011/0...y-nra.html - Research Report from NRA

http://kfc1973-stock.blogspot.com/2011/0...idend.html - The Edge speaks with CEO John Stuart

The CEO seems bullish about the mutual fund's prospect but has highlighted the difficulty in deploying the cash hoard in sensible acquisitions. He mentioned that they were studying the possibility of acquiring a fleet of LNG carriers in Singapore and a cable business in Taiwan - while the numbers were sound, the acquisition price was deemed to be high. As a result, he has decided to return capital to shareholders in the form of share buy backs. Over the past 2 months, MIIF has repurchased 24.1 million units which represents 1.85% of the original float.

While I believe TBC and CXP should be able to generate higher distributions with time in line with their EBITDA growth, I wonder whether will HNE Expressway be able to generate sufficient cash-flow to maintain the distribution during the heavy debt amortization period in post 2013 ? Either way, MIIF shareholders will benefit from a big distribution from HNE this year since its results in FY 2010 was exceptional.

(Not Vested)