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Kim Eng says “in Hutch we trust” after Hutchison Whampoa (0013.HK) announced plans to spin off its HK and China port assets on SGX.
“The trust structure is reportedly planning to raise a massive US$6 billion ($7.7 billion), making it the biggest IPO in Singapore ever...the issue will breathe new life into SGX-listed business trusts in general, particularly infrastructure trusts.” Says K-Green Trust (LH4U.SG) and Macquarie International Infrastructure Fund (M41.SG) relative laggards, trading at or below book values, despite attractive yields of between 5.1%-7.4%.
“The trust structure is reportedly planning to raise a massive US$6 billion ($7.7 billion), making it the biggest IPO in Singapore ever...the issue will breathe new life into SGX-listed business trusts in general, particularly infrastructure trusts.” Says K-Green Trust (LH4U.SG) and Macquarie International Infrastructure Fund (M41.SG) relative laggards, trading at or below book values, despite attractive yields of between 5.1%-7.4%.
House’s calculation indicates the Hutch trust could be listed at P/B of between 1.3X-1.5X, with potential yield of around 6.0%. Ascribing similar valuations to KGT and MIIF “suggest some 40% upside, and still provide stable and attractive yields.”
Adds, the Hutch mega-issue would also serve to raise the profile of business trusts in general, thereby escalating investor interest and liquidity into this investment class. “We may also see the emergence of more infrastructure trusts - Sembcorp Industries’ (U96.SG) portfolio of utilities operations comes to mind.”
