A7RU Stock Intrinsic Value – Keppel Infrastructure Trust’s Earnings Growth Trails Shareholder Returns Over Three Years
December 19, 2023
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Keppel Infrastructure Trust ($SGX:A7RU) (KIT) is a Singapore-based business trust that manages and operates essential infrastructure assets. Its portfolio consists of stakes in a range of energy, water, and wastewater assets under long-term concessions. Over the past three years, its shareholder returns have outpaced the growth of its earnings. This suggests that investors have been optimistic about KIT’s prospects despite the lower earnings growth rate. This could be due to the fact that KIT’s portfolio of infrastructure assets offers a reliable source of income and steady dividends to shareholders.
Investors have also been buoyed by KIT’s efforts to diversify its revenue sources. The trust recently acquired stakes in waste-to-energy, renewable energy, and data center businesses. This move has allowed KIT to expand its footprint in the infrastructure sector while mitigating some of the risk associated with investing in a single asset class. With these new investments, KIT hopes to drive further shareholder returns while also increasing its earnings growth.
Earnings
Keppel Infrastructure Trust (KEP) reported its earning report of FY2023 Q3 ending September 30 2019, with total revenue of 407.47M SGD and net income of 12.95M SGD. This is a significant decrease compared to the previous year, of 20.3% and 46.2% respectively. In the last 3 years, KEPPEL INFRASTRUCTURE TRUST’s total revenue has grown to 481.77M SGD, yet the growth rate of its earnings have trailed behind its shareholder returns. This suggests that the company may not be effectively managing resources to maximize profits.
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for A7RU. More…
| Total Revenues | Net Income | Net Margin |
| 2.09k | 54.53 | 2.8% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for A7RU. More…
| Operations | Investing | Financing |
| 367.24 | -1.08k | 709.02 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for A7RU. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 5.58k | 3.57k | 0.3 |
Key Ratios Snapshot
Some of the financial key ratios for A7RU are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 8.6% | 15.5% | 10.9% |
| FCF Margin | ROE | ROA |
| 15.1% | 8.3% | 2.5% |
Share Price
Keppel Infrastructure Trust (KIT) stock opened at SG$0.5 and closed at SG$0.5 on Friday, a 1.0% decrease from the prior closing price of 0.5. Despite this lower rate of growth, KIT has maintained an attractive dividend yield, which has been consistently above 5% in the past three years. KIT’s revenue stream is diversified across a variety of businesses, such as water, waste management, power generation, and data centers.
The trust has also followed an asset-light strategy, meaning that it does not own any physical infrastructure but instead leases out the use of its services. Despite the relatively slow rate of growth over the past three years, KIT is still well-positioned for future growth as it looks to expand its operations in Asia-Pacific and capitalize on the rising demand for data centers in the region. Live Quote…
Analysis – A7RU Stock Intrinsic Value
At GoodWhale, we analyze KEPPEL INFRASTRUCTURE TRUST’s fundamentals to provide investors with a better understanding of the stock. After assessing the company’s financials, our proprietary Valuation Line has calculated the fair value of the share to be around SG$0.5. Currently, the stock is being traded at SG$0.5, which implies that it is undervalued by 4.9%. More…
Peers
The competition between Keppel Infrastructure Trust and its competitors, Gulf Resources Inc, Ise Chemicals Corp, and Suzhou Jinhong Gas Co Ltd, is fierce. Each company is vying for a larger market share and striving to become the leader in their respective industries. While each company brings a unique set of services and products to the table, the race is on to see who will come out on top.
– Gulf Resources Inc ($NASDAQ:GURE)
Gulf Resources Inc is a leading chemical products manufacturer and distributor in the world. The company is based in Houston, Texas and its products include bromine, crude salt, and natural gas. As of 2023, its market cap stands at 36.83M and its return on equity (ROE) is 4.84%. Gulf Resources Inc has a strong presence in the chemical products market and enjoys a large customer base due to its consistent quality of products. The company’s impressive market cap and ROE are a testament to its consistent financial performance over the years.
– Ise Chemicals Corp ($TSE:4107)
Ise Chemicals Corp is a global chemicals manufacturer based in Japan. The company produces a variety of chemicals for industrial, agricultural and healthcare uses. As of 2023, the company has a market cap of 26.41B and a Return on Equity (ROE) of 7.54%. This market cap indicates that the company has a significant size and presence in the industry. The ROE, which is a measure of profitability and efficiency, is also very healthy. This indicates that the company’s management is able to generate good returns from its assets.
– Suzhou Jinhong Gas Co Ltd ($SHSE:688106)
Suzhou Jinhong Gas Co Ltd is a Chinese gas production and distribution company that is currently valued at a market cap of 10.17B as of 2023. The company has been able to maintain a respectable Return on Equity (ROE) of 6.0%. As a gas production and distribution company, Suzhou Jinhong Gas Co Ltd is responsible for creating and delivering natural gas to its customers across China. The company has grown significantly over the years and is now one of the most respected companies in China’s energy sector.
Summary
Keppel Infrastructure Trust (KIT) is an infrastructure and utilities trust that focuses on investments in energy, transportation, and environmental related infrastructure assets. The trust has been operating for over a decade and has grown significantly since its inception. KIT’s portfolio consists of a diversified range of income-generating assets across multiple markets and geography. Despite the substantial growth in the trust’s portfolio, its three-year earnings growth has lagged behind shareholder returns. This can largely be attributed to the changing market conditions and macroeconomic factors impacting the trust’s revenues.
The trust also faced some headwinds from declining interest rates, exchange rates, and investor sentiment. These factors have caused the trust’s share price to remain relatively flat over the past three years. Despite these challenges, KIT has managed to maintain its dividend payments to shareholders and remains committed to its long-term growth objectives. Investors need to carefully assess the trust’s performance before investing in KIT.
