RCS - BBGI Global Infrast. - Results analysis from Kepler Trust Intelligence

BBGI Global Infrastructure SAAnnouncement

04/04/2024 10:15

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RNS Number : 3335J  BBGI Global Infrastructure S.A.  04 April 2024

BBGI Global Infrastructure (BBGI)

04/04/2024

Results analysis from Kepler Trust Intelligence

BBGI Global Infrastructure (BBGI) has released its results for 2023. The trust
saw a small 1.2% decrease in NAV over the 12 months period. This was the first
decline in NAV since IPO in 2011 and was almost entirely due to macro factors
outside of the managers' control, including an increase to the discount rate,
movements in the currency markets, and proposed changes to Canadian tax
legislation.

Long-term performance for the trust remains strong. Annualised returns since
IPO in 2011 to the end of 2023 equalled 8.6% on a NAV total return basis.

The trust met its higher dividend target for the year of 7.93p per share, a 6%
increase on 2022. Dividends were fully covered at 1.4x. BBGI reaffirmed its
dividend target of 8.40p per share for 2024 - another 6% year-on-year
increase. This is also expected to be fully covered.

The ability to maintain a progressive dividend policy looks secure. Projected
cash flows from the existing portfolio would be enough to sustain annual
dividend growth for the next 15 years, even if no further investments were
made.

The trust fully paid down its revolving credit facility last year, using
surplus cash generated by the underlying portfolio. BBGI made use of the
facility in 2022 to make two investments, demonstrating that BBGI can grow
organically without going to the equity markets.

BBGI Chair Sarah Whitney said: "The investment environment has fundamentally
altered over the last 24 months, but BBGI's portfolio has all the defensive
qualities required to deliver a solid income stream. Our management team
continues to manage the company's risk profile with their customary attention
to detail and will review opportunities to extend the life of the portfolio in
order to maintain the duration of our asset base for the benefit of
shareholders in the years ahead."

Kepler View

We think BBGI Global Infrastructure (BBGI) possesses numerous strengths as a
means to gain exposure to infrastructure assets today.The trust continues to
offer investors a secure source of long-term income and capital growth
potential, with the small dip in NAV last year largely due to macro factors,
rather than investment decisions the managers have made.

BBGI now has no debt on the trust level, with management meeting their
commitment to fully repay by the 2023 year end a revolving credit facility
that they made use of in 2022 to fund two investments. That those repayments
were made entirely from surplus cash flows is a sign that the trust can
continue to grow organically, without issuing new equity.

Dividend growth continues to be compelling, with the 6% increase made last
year being matched in 2024 with an equivalent growth target. That the trust
can continue to pay a progressive dividend for 15 years, assuming no further
investments are made, is testament to the stability of cash flows in the
underlying portfolio.

Ultimately we think BBGI sits an interesting juncture. The trust trades at a
wide discount and the potential for rate cuts in the near term mean there is
potential for investors to enjoy an uplift to capital, as well as the ability
to lock in an attractive forward yield.

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