Asian Pay TV Trust (APTT) has released its 1H2024 results.
Summary
- Revenue Down, Net Profit Up due to good margin control
- Maintain 1.05 dividend guidance, translating to 13% yield
There is nothing surprising in its 1H report. While revenue is down due to the declining TV business, good margin control by the trust and its improving broadband business has cushioned the decline.
The trust produces about $90 million in free cash. Factoring interest expense on its debt, APTT cash generation ability is $48 million per year.
1.05 cents DPU needs $19 million in cashflow, that means 32% of free cash is used. It is sustainable.
Conclusion
APTT giving out a dividend of 1.05 SG cents is sustainable and given Taiwan's interest rate is not expected to rise, we should not expect downside revision to its dividends.
The trust is in an essential service, however, its leverage ratio is high (58%). I am valuing APTT to be a 7% dividend yielder, the company can be a 14.5-15 SG cents company for its recurring dividend. A potential upside of 81% is in store.
There is some risk when they refinance their onshore debt. They are hedged up to June 2025
ReplyDeleteIts going to be a perpetual risk because this trust will never go debt free. So whats more important is if the declining revenue can support a 15 mil dividend outflow which I think can last for at least a decade
DeleteThe step up in rates is quite significant as the last refi was done in 2022 when rates were at least 150 bps lower. They have over a billon in debt so thats easily at least 15m in incremental interest costs. They are planning to bring all their offshore debt which are more expensive to onshore which will help to mitigate the impact. Just not sure how much it can offset
ReplyDeleteHi Yappie, APTT has about SGD$1 billion in Taiwan onshore debt. It is tagged to taiwan interbank rate (TAIBOR)+ 1.1%. Currently they have hedged at TAIBOR 0.9%, Taibor is 1.6% at moment. So if refin, it might be 0.7% more. For their offshore debt of about $100 million, it is about 7% interest, so bringing it back to Taiwan reduces it to 2.3%
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