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To provide shareholders with long-term, inflation-linked returns, by growing dividends and creating the potential for capital appreciation through high-quality public infrastructure projects internationally or located within core OECD countries.
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I think you are correct oldbut - its almost a deliberate play by Amber to use current market price conditions (bonds, gilts etc) as a reason to lower infra sector valuations - in the hope that once the sentiment improves later this year (or possibly 2025) then through their stewardship INPP will rise again! If I was being further cynical I might add that certain performance linked fund manager bonuses are linked to % fund NAV increases.....all the best with your alternative plays. SB
Silverblade, glad we agree but my view is that the manager is trying not to show exuberance in what is clearly not a time when infrastructure is in fashion. They can see clearly that we will be bought for yield as interest rates fall and, if anything, are being a trifle too downbeat! Not selling but my new tax year's ISA will be heading for more safe and boring relatively high yielders, like insurance cos and I may well trust Alliance T with more. All the best -Oldbut
Not exactly the upbeat set of results I was expecting (although I do recognise the current macro environment stills weighs heavily) . Biggest negative for me was the significant 4.1% NAV reduction (c.£120m) - despite being advised we were due a modest increase. The two reasons given don't add up imo - dividends are covered by 1.1x earnings and why if we have inflation linked higher cash flows is the investment adviser increasing discount rates? Positives are the debt free position, further 3% increase to the dividend next year, plenty cash still earmarked for a share buyback and strong cash realised from existing investments (OFTO). However, imo INPP need to start navigating the path from being valued on discounted cash flows into asset valuations - cadent, angel trains, thames tideway. Despite repaying the CDF we have lost value and trade at a 20% discount to NAV - that's £500m, without the large unrealised value on the balance sheet from cadent etc. SB
Very strong balance sheet having paid off the RCF, just like BBGI who also reported today. But yes their commentary focused massively on the dividends!!! I guess they know their audience!!
Definite defensive tone to this and seems to have been negatively affected by current inflation.(Surprise,surprise!)
Still worth holding, particularly since falling inflation, assuming it continues, should benefit in the medium term.
On Friday. Comforted by the naughty thought they actually know something and await the figures due next week!
Only a week until the figures which I hope will be better than even Silverblade expects. My fingers are crossed they will be good enough to get a bit of exposure in the 'learned' Press! Not that I am waiting to sell these but my p/f has perked up a bit in the last week or so and I am hoping this just turns it positive for the first time. One or two speccies moving positive really helps in that regard! (Marvellous what the odd penny -share can do to a p/f when it finally happens)
*interest rate decreases….doh……SB
I expect a solid earnings report as well oldbut - slight increase to NAV; growing dividend; no debt; cash on balance sheet for buyback programme and future investments; and latent value in the portfolio which has not been reflected in the current NAV calculations - but the infra market remains a very much unloved sector, although at some point (no doubt linked to interest rate increases later in the year) funds will start to move back in...….lets hope. SB
....because decent buying today including a £2m which confirms to me we are in for an excellent report and more than a little SP uptick!
I'm the same oldbut - picking up some here and there - I have a long term target holding in mind and am about 65% of the way there. In the next six years the dividend should hit c.10p a share based on current growth - which they have stated is covered for the next 20 years. Had a quick look at Angel Trains - in 2008 INPP bought 5% for £25m; in 2021 they bought another 5% for £100m - 4x multiple. I believe there are many similar investments where the value of the equity is considerably higher now than the original purchase price (especially in the regulated asset, transport sectors). I do not believe these are reflected in the current NAV. A number of concessions will come to and end in the next 10 years - which will throw off cash. Its a good sized fund, but not beyond possibility one of the big asset managers cast an eye here. At some point value will return, but in the meantime - load up. SB
....Topped up again. Now one of top 5 in the old p/f.
Thanks Silverblade. You drew to my attention again to how undervalued INPP is even now. Fortunately my ISA holds a bit of cash with more on its way from the takeover of City Pub Co. Looks like a perfect time to top up before results, even though I do not expect INPP ever to blow the lights out with good results. Having held it for so long I shall be delighted with a decent Chairman's Report, another tick up in the divi and a few 'pundits' causing a bit of long term buying!
Company updating II's today on current progress. One interesting point to note is the panel discussion which includes a review on both Cadent and Angel trains. Cadent is in the news as both Macquarie and Federated Hermes appear to be looking to sell a combined 9.6% from their current stakes (Macquarie hold 26% in total and looking to sell 5%; FH hold 13% and looking to sell 4.6%). The sale value is being touted in the region of £1.3B. INPP own 7.25% of cadent which was purchased for a total investment of £430m. The macquarie deal would imply cadent is now worth in the region of £13B - more than double its 2017 valuation. I am not sure what value INPP currently has for cadent on its balance sheet but its going to be a lot less than the numbers currently being discussed - this adds double digit numbers to its current NAV if the valuation and sale goes through at current levels. I assume INPP are going to brief II's on the underlying value of its investment in cadent - and similar for Angel Trains - in an effort to stimulate interest in its shares. SB
Apologies oldbut….I should have realised given your previous postings here! I have been surprised at the recent decline here in the last couple of weeks - I expected us to move into the £1.40 territory after the buyback announcement not move towards £1.20. Especially given the repayment of the RCF and effectively sitting on £100m of cash waiting to be invested. It’s getting close to a 7% yield. If I can free up cash elsewhere I will be looking to pick up some at this price. ATB SB
Hi Silverblade,
I was being amusing using the word 'hiding'about its NAV. Of course I agree wholeheartedly with your views and bought more today. The divi RNS is due in a month or so and present yield is over 6%. Have held since time immemorial!
Not so sure it’s hiding its NAV - it produces a bi-annual NAV similar to most other funds of this nature. £1.55 as at June 2023- next update due in March covering period to Dec 2023. At some point discount rates will start to reduce which will increase NAV - and as most funds the valuation assumptions are generally quite conservative. Loads of shares traded in last 48 hours - reflecting flow of funds out of sector and negative view of UK - combined with funds no longer actively investing. Although unusual timing given the buyback intro. Still think this is a decent hold - and once interest rates reduce and inflation gets closer to 2% the annual 2.5% dividend increase will do well here - plus decent capital growth upside imo. SB
Seems to hide its current NAV, unlike most other ITs. It is way above SP and it has been making big efforts to counter in recent months. Expect SP to head upward in coming months.
Based on todays RNS we can assume that the £200m OFTO realisation has been received and used in part to fully pay off INPP's corporate debt (£80m) and commence its £30m share buyback programme - with c.£1m spent yesterday. Will be interesting to see the pace of spending and impact on price - I also wonder if the company has an internal target on what an acceptable discount to NAV would look like. £100m of further equity investments due to close in near future from remainder of OFTO realisation. Progressive and pragmatic approach from company which should see positive impact in coming weeks and months alongside wider macro benefits later in year with (hopefully) falling interest rates. SB
I thought the biggest factor in INPP and other infrastructure prices is the interest rate trend. Lot's of talk about discount to NAV, but isn't the differential between dividend return and interest rates the biggest factor? INPP looks good as it increases dividends where other infrastructure funds are struggling to do so, coupled with the increasing likelihood that interest rates have peaked and will soon be heading down. I am just wondering what the interest rate needs to be to see share price recover to 170p,? I think 3% with a downward trend should do it. Not sure when that would happen but any progress towards it in 2024 will be very positive.
Your not all alone oldbut......I think the whole infra sector offers pretty decent value at the levels across the sector - including INPP. Debt free in January despite making a further significant OFTO investment, chairman buying shares, increasing 2023 dividend by 5%, confirming minimum 2.5% increase going forward, £30m 2024 share purchase programme - I agree we should start to see the discount to NAV narrowing over the course of the year alongside interest rates potentially starting to reduce mid year. Still decent upside from current price (my average is just over £1.40) - should easy make a 10%+ annual return here (capital and dividend) I also hold GABI and GCP - some interesting stuff happening there as well - and RECI. To 2024......ATB. SB
Seems like I probably am alone in my sentiment here. International infrastructure is also tipped for being more essential
than ever so with continuing emphasis on reducing emissions worldwide, I see this as moving higher still in the next 6 months or so.
....the only one who has read the latest to come out of INPP?
Within 60days they will have no debt and may start a buyback with the declared intention of lowering the discount to net assets. Very glad I chose to buy more last month!
Safe and now on a wide discount. Builtin high % of inflation protection. Have had some almost since it floated.
Been here almost since day of issue. Managers are extremely conservative and cautious.Just the way I want them with my hard-earned savings!! Don't hold these long term if you want ups and downs every time you look at the SP. I hold these and gamble in others if I dare.