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MIIF
Bloomberg: MIIF SP
Reuters: MIIF.SI
27 Feb 2012
Price Relative
S$ 1 .0 0 .9 0 .8 0 .7 0 .6 0 .5 0 .4 0 .3 0 .2 F e b -0 8 F e b -0 9 F e b -1 0 F e b -1 1 R e la tiv e In d e x 218 198 178 158 138 118 98 78 58 38 F e b -1 2
M IIF (L H S )
R e la t iv e S T I IN D E X (R H S )
Turnover EBITDA Pre-tax Profit Net Profit Net Pft (Pre Ex.) EPS (S cts) EPS Pre Ex. (S cts) EPS Gth (%) EPS Gth Pre Ex (%) Diluted EPS (S cts) Net DPS (S cts) BV Per Share (S cts) PE (X) PE Pre Ex. (X) P/Cash Flow (X) EV/EBITDA (X) Net Div Yield (%) P/Book Value (X) Net Debt/Equity (X) ROAE (%) Earnings Rev (%): Consensus DPS (S cts): Other Broker Recs:
45 37 33 33 37 2.5 2.9 (41) (37) 2.5 3.0 80.2 23.3 20.4 40.0 10.3 5.1 0.7 CASH 3.1
59 48 48 48 48 3.8 3.8 52 33 3.8 5.5 76.6 15.4 15.3 11.3 14.9 9.4 0.8 CASH 4.8 5.5 B: 4
73 61 61 61 61 5.2 5.2 37 36 5.2 5.5 73.6 11.2 11.2 nm 11.3 9.4 0.8 CASH 6.7 5.5 S: 0
72 60 60 60 60 5.3 5.3 1 1 5.3 5.5 68.9 11.1 11.1 nm 11.1 9.4 0.8 CASH 7.3 5.5 H: 1
ICB Industry : Financials ICB Sector: Equity Investment Instruments Principal Business: MIIF is an Asia-focused owner and operator of private infrastructure businesses
Note: The revenue and earnings shown above are on an adjusted basis and represent the earnings of MIIF from its key investments that underpin the dividend flow to shareholders, and are not in accordance with accounting standards.
www.dbsvickers.com Refer to important disclosures at the end of this report ed: JS / sa: YM
nm 75% ! -8% 308% -27% 49% 30% -94% 47% 128% 6% 15% nm 51% 47% Increased market cap in FY11 and decrease in cash balance led to higher net investment value
Includes credit facility renewal fee of S$1m Higher due diligence activity in FY10
Higher stake in TBC (47.5% vs. 20% in FY10) Organic growth in asset Organic growth in asset Higher management fees
Source: Company, DBS Vickers Note: The revenue and earnings shown above are on an adjusted basis and represent the earnings of MIIF from its key investments that underpin the dividend flow to shareholders, and are not in accordance with accounting standards.
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381.6 83%
3672.6 59.6%
Source: Company, DBS Vickers Note: Ownership change for MIIF in 2011-12 from 20% stake previously to current 47.5% stake
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92.1
50.2
0.55
1,288.8
1,196.7
444.6
21%
128.9
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1196.7
MIIF Dividend Yield Trading Band currently trading below mean valuations
1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 5% 7% 9% 11% 13%
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Revenues (S$ m) CXP HNE TBC Miaoli Others Total Income Statement (S$ m)
FY Dec
2 14 17 0 31 64
5 21 13 0 6 45
5 23 30 0 1 59
6 20 45 0 1 73
6 18 46 0 1 72
Income from HNE impacted by toll rate cut Full year impact of higher stake
2009A
2010A
2011F
2012F
2013F
Investment Income Fund Expenses Operating Profit Other Non Opg (Exp)/Inc Associates & JV Inc Net Interest (Exp)/Inc Exceptional Gain/(Loss) Pre-tax Profit Tax Minority Interest Preference Dividend Net Adjusted Income Net Adj Inc Pre Except. EBITDA Growth Revenue Gth (%) EBITDA Gth (%) Opg Profit Gth (%) Net Profit Gth (%) Margins & Ratio Opg Profit Margin (%) Net Profit Margin (%) ROAE (%) ROA (%) ROCE (%) Div Payout Ratio (%)
Margins Trend
89.0% 84.0% 79.0% 74.0% 69.0% 2009A 2010A 2011F 2012F 2013F Operating Margin % Net Income Margin %
Source: Company, DBS Vickers Note: The revenue and earnings shown above are on an adjusted basis and represent the earnings of MIIF from its key investments that underpin the dividend flow to shareholders, and are not in accordance with accounting standards.
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Revenue Trend
60 50 40 30 20 10 0 2Q2009 3Q2009 4Q2009 1Q2010 2Q2010 3Q2010 4Q2010 1Q2011 2Q2011 3Q2011 9000% 8000%
Revenue Cost of Goods Sold Gross Profit Other Oper. (Exp)/Inc Operating Profit Other Non Opg (Exp)/Inc Associates & JV Inc Net Interest (Exp)/Inc Exceptional Gain/(Loss) Pre-tax Profit Tax Minority Interest Net Profit Net profit bef Except. EBITDA Growth Revenue Gth (%) EBITDA Gth (%) Opg Profit Gth (%) Net Profit Gth (%) Margins Gross Margins (%) Opg Profit Margins (%) Net Profit Margins (%)
10 0 10 (2) 8 0 0 0 0 7 0 0 7 8 8
48 0 48 (2) 46 0 0 0 0 46 0 0 46 46 46
Revenue
Most of the dividend income is received in 3Q (97.7) (101.9) (101.9) (101.9) 100.0 (80.4) (80.4) 1,139.3 (1,278.5) (1,278.5) (1,261.2) 100.0 76.4 75.3 (94.2) (141.0) (141.0) (143.9) 100.0 (538.7) (568.1) 8,213.4 (1,566.9) (1,566.9) (1,491.1) 100.0 95.1 95.1 (98.3) (103.9) (103.9) (103.9) 100.0 (212.8) (212.8)
Source: Company, DBS Vickers Note: The revenue and earnings shown above are on an adjusted basis and represent the earnings of MIIF from its key investments that underpin the dividend flow to shareholders, and are not in accordance with accounting standards.
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Asset Breakdown (2011) 930 0 94 176 0 3 0 1,202 6 17 80 5 1,066 29 1,202 (15) 90 37.7 N/A N/A 0.0 7.7 7.7 CASH (0.1) (195.0) NA 581 0 89 486 0 13 0 1,170 6 12 74 6 1,041 31 1,170 1 406 65.6 N/A N/A 0.0 27.3 27.3 CASH (0.4) (417.5) NA 880 0 81 116 0 4 1 1,081 26 12 45 5 965 27 1,081 (7) 45 54.5 N/A N/A 0.1 3.2 3.2 CASH 0.0 448.9 NA 807 0 75 91 0 4 1 977 26 12 45 5 862 27 977 (7) 21 21.1 N/A N/A 0.1 2.6 2.5 CASH 0.0 0.0 NA 734 0 70 97 0 4 1 905 26 12 45 5 790 27 905 (7) 26 21.3 N/A N/A 0.1 2.7 2.7 CASH 0.0 0.0 NA
Bank, Cash and Liquid Assets 10.5%
Net Fixed Assets Invts in Associates & JVs Other LT Assets Cash & ST Invts Inventory Debtors Other Current Assets Total Assets ST Debt Other Current Liab LT Debt Other LT Liabilities Shareholders Equity Minority Interests Total Cap. & Liab. Non-Cash Wkg. Capital Net Cash/(Debt) Debtors Turn (avg days) Creditors Turn (avg days) Inventory Turn (avg days) Asset Turnover (x) Current Ratio (x) Quick Ratio (x) Net Debt/Equity (X) Net Debt/Equity ex MI (X) Capex to Debt (%) Z-Score (X)
Associates'/J Vs 0.0%
About S$320m cash deployed to raise stake in TBC from 20% to 47.5%
Capital Expenditure
400
Pre-Tax Profit Dep. & Amort. Tax Paid Assoc. & JV Inc/(loss) Chg in Wkg.Cap. Other Operating CF Net Operating CF Capital Exp.(net) Other Invts.(net) Invts in Assoc. & JV Div from Assoc & JV Other Investing CF Net Investing CF Div Paid Chg in Gross Debt Capital Issues Other Financing CF Net Financing CF Currency Adjustments Chg in Cash Opg CFPS (S cts) Free CFPS (S cts)
(117) 6 (1) 0 (1) 170 57 167 0 0 0 0 167 (58) (25) 0 0 (84) 0 140 4.6 18.0
33 6 (1) 0 (16) (3) 19 335 0 0 0 0 335 (39) (6) 0 0 (45) 0 310 2.7 27.3
350 300 250 200 150 100 50 0 2009A 2010A 2011F 2012F 2013F
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DBSV recommendations are based an Absolute Total Return* Rating system, defined as follows: STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame) BUY (>15% total return over the next 12 months for small caps, >10% for large caps) HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps) FULLY VALUED (negative total return i.e. > -10% over the next 12 months) SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)
Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the commodity referred to in this report. DBS Vickers Securities (USA) Inc ("DBSVUSA")"), a U.S.-registered broker-dealer, does not have its own investment banking or research department, nor has it participated in any investment banking transaction as a manager or co-manager in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively.
ANALYST CERTIFICATION The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of 27 Feb 2012, the analyst and his / her spouse and/or relatives who are financially dependent on the analyst, do not hold interests in the securities recommended in this report (interest includes direct or indirect ownership of securities, directorships and trustee positions).
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COMPANY-SPECIFIC / REGULATORY DISCLOSURES DBS Vickers Securities (Singapore) Pte Ltd and its subsidiaries do not have a proprietary position in the company mentioned as 1. of 23 Feb 2012 2. DBSVR, DBSVS, DBS Bank Ltd and/or other affiliates of DBS Vickers Securities (USA) Inc ("DBSVUSA"), a U.S.-registered brokerdealer, may beneficially own a total of 1% or more of any class of common equity securities of the company mentioned as of 27 Feb 2012. Compensation for investment banking services: i. DBSVR, DBSVS, DBS Bank Ltd and/or other affiliates of DBSVUSA have received compensation, within the past 12 months, and within the next 3 months receive or intends to seek compensation for investment banking services from Hutchison Port Holdings Trust. DBSVUSA does not have its own investment banking or research department, nor has it participated in any investment banking transaction as a manager or co-manager in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively.
3.
ii.
RESTRICTIONS ON DISTRIBUTION General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. Australia This report is being distributed in Australia by DBSVR and DBSVS, which are exempted from the requirement to hold an Australian financial services licence under the Corporation Act 2001 [CA] in respect of financial services provided to the recipients. DBSVR and DBSVS are regulated by the Monetary Authority of Singapore [MAS] under the laws of Singapore, which differ from Australian laws. Distribution of this report is intended only for wholesale investors within the meaning of the CA. This report is being distributed in Hong Kong by DBS Vickers (Hong Kong) Limited which is licensed and regulated by the Hong Kong Securities and Futures Commission. This report is being distributed in Singapore by DBSVR, which holds a Financial Advisers licence and is regulated by the MAS. This report may additionally be distributed in Singapore by DBSVS (Company Regn. No. 198600294G), which is an Exempt Financial Adviser as defined under the Financial Advisers Act. Any research report produced by a foreign DBS Vickers entity, analyst or affiliate is distributed in Singapore only to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chap. 289 of Singapore. Any distribution of research reports published by a foreign-related corporation of DBSVR/DBSVS to Accredited Investors is provided pursuant to the approval by MAS of research distribution arrangements under Paragraph 11 of the First Schedule to the FAA. This report is being distributed in the UK by DBS Vickers Securities (UK) Ltd, who is an authorised person in the meaning of the Financial Services and Markets Act and is regulated by The Financial Services Authority. Research distributed in the UK is intended only for institutional clients. This report is being distributed in Dubai/United Arab Emirates by DBS Bank Ltd, Dubai (PO Box 506538, 3 Floor, Building 3, Gate Precinct, DIFC, Dubai, United Arab Emirates) and is intended only for clients who meet the DFSA regulatory criteria to be a Professional Client. It should not be relied upon by or distributed to Retail Clients. DBS Bank Ltd, Dubai is regulated by the Dubai Financial Services Authority. Neither this report nor any copy hereof may be taken or distributed into the United States or to any U.S. person except in compliance with any applicable U.S. laws and regulations. In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.
rd
Hong Kong
Singapore
United Kingdom
Other jurisdictions
DBS Vickers Research (Singapore) Pte Ltd 8 Cross Street, #02-01 PWC Building, Singapore 048424 Tel. 65-6533 9688 Company Regn. No. 198600295W
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