CitySpring Infrastructure reported a 3% slide in FY10 (Mar YE) revenue to $388.1m, which was in generally line with mkt expectations. Nevertheless, City Gas continues to register firm consumption of its town gas, what with the opening of the two integrated resorts and the economic recovery in Singapore. Mgmt is maintaining its DPU guidance of 4.2 cts for FY Mar11F, which translates to a sustainable yield of 7.1%.
In the near-term, the lack of acquisition growth catalyst continued to remain an impediment to CitySpring’s re-rating. The gas network conversion project, estimated to cost CitySpring some $200m is expected to realize only in the next 6-12 mths when the Energy Market Authority provides details on the cost recovery and return on capital for this project.
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