CitySpring Infrastructure Trust: Worth another look?

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.

Regular readers know that I only like rights issues when they are distribution yield accretive. If they are not, I need some convincing that they would be good for me in some way. Whether I would buy the argument is something else.

So, to ameliorate such a risk, distribution yield has to increase while gearing remains the same before I would consider buying in. After all, I am able to get the same distribution yield or higher from AIMS AMP Capital Industrial REIT, Sabana REIT and even Cambridge Industrial Trust without the same level of gearing. This is purely from the perspective of yield and gearing, of course.

If people like CitySpring Infrastructure Trust's businesses or even its management for some reason and find its current yield and gearing acceptable, it is their call, of course.

See slides here: Presentation 1H FY12

Related post:
CitySpring Infrastructure Trust: Rights issue.

Tea with AK71: Taste of Hong Kong.

Firstly, this has nothing to do with my recent trip to Hong Kong. This happened in Singapore. :)

I was at Illuma and had a new dining experience. Well, it was a new experience to me.

Taste of Hong Kong. Business was good!

Instructions at every table.

Waffle with bonito flakes, luncheon meat and something saucy. I loved it!

Inexpensive comfort food in an air-conditioned environment with no service charge. Burp. I mustn't do this too often. Promise, I'll try.

For photos of my recent trip to Hong Kong, go to my travel blog: click here.