In reply to a reader, Rookie, who asked if I would consider investing in CitySpring Infrastructure Trust now:
Hi Rookie,
CitySpring at 33.5c? With a promised annualised DPU of 3.28c, the expected distribution yield is 9.79%. This annualised DPU is, of course, lower than the 4.2c in the preceding year.
The balance sheet of CitySpring has strengthened after its latest rights issue in September which saw Temasek increasing its share of the Trust substantially (reflecting a lack of confidence in the Trust by investors) from 27.9% to 37.4%.
Borrowings: S$1,324.5m
Total assets: S$2,004.5m
Gearing: 66%.
If we take out the intangibles of S$ 420.8m from total assets, gearing goes to 83.6%.
Yield has improved and gearing has come down somewhat. However, I am concerned that there would be yet another rights issue to further "strengthen its balance sheet". When? I don't know.
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