TSI - Transfield Services Infrastructure

[MOSSuMS]

Does anyone know why this stock has slid from support levels just under 90c down to 65c in the last few days?

I've been watching this stock for a while follwing an infrastructure presentation (ASX Investor Hour in Perth - skip to pages 36-38) to balance the portfolio and add an income play.

I was trying to pluck up the courage for a small buy if it broke lower, but this has surprised me, so long after their results. Has TSE had some more bad news, is there a power station issue, has the wind blown on thier farms for the last time, or are there more debt rumblings? The drop is so much greater than the general market...

 

[MOSSuMS]

Still none the wiser. Haven't found any rumours, no debt to refinance in the short term, and not aware of any issues with related parties.

ASX issue a speeding ticket on the 9th, and TSI said 'nothing to declare'.

I was still too nervous, so held off.

Then TSI rose 27% on the 13th.

I'm sure the ASX will issue another ticket for this massive switch in direction, to which the response from TSI will be the same I presume.

I'm just putting it down to the switches we are seeing between fear versus greed at the moment. If you know different, let us know!

 

[dirkdiggler444]

This seems like a great little fund, no debt refinancing issues until 2011, so no real concern there, and they are looking at a DIV of 12c, which 15% on current $0.80 SP.

Thats if they hold their predicted revenue, but they reconfirmed they are on track for holding that as recently as 9th Feb 09. Also most of their revenue is contracted, so guaranteed income, and being mostly green power, things will be looking good for future.

What I'm chasing is anyone got some insights into this? as I've been holding a bit from a couple of months back, but thinking of investing more heavily. I've gone through the last 2 quarters worth of reports, and besides one power station down on output, there's no bad news. Anyone think differently??

 

[MOSSuMS]

Thanks Dirt Digger - I've been watching this for a long while and like what I see also, although Transfields issues cause some concern. I've not got in yet unlike yourself though - just not enough coverage due to their size

It's been steadily regaining it's sahre price strength, so I think I've missed the boat again - 65c would have been nice!

I wonder who will get the solar contracts the Gov announced in the bugdet, as there wasn't anything more for wind explicitly...

 

[oldblue]

I prefer the parent company, TSE.
Since the heavily discounted cash issue to repair the balance sheet - necessary largely due to the weakening of the AUD v USD, TSE's SP has put on over a dollar in the last three months.
I find it easier to see how big govt spending on infrastructure will benefit TSE rather than on TSI which is invested in existing assets.

 

[dirkdiggler444]

I've got both TSE and TSI, have been trying to accumulate TSI at roughly the $1 SP level.

TSE has put on about $1.15 in last 3 months ($1.55 low to $2.70 high). thats a 74% increase on its SP low of $1.55.

however TSI has put on $0.57 in less than 3 months, ($0.57 low to $1.14 high). Thats a 100% increase on its SP low of $0.57.

so the average Joe should have made more money on TSI, over a shorter period of time too.

TSI has a predicted increase in EPS for the next 2-3 years, TSE is falling somewhat as contracts are tendered for and work is won or lost, or maybe more to do with currency markets and AUD vs USD as someone mentioned.

TSI income is more fixed as like you said Old Blue, it's based on existing infrastructure with contracted income. TSE should pick up, but the order books aren't as full as past years using their forecast EPS as a guide. There may be other main factors that are affecting TSE's fall in EPS though. not just workload.

What I am a bit unsure about though, is TSI's forecast DIV is higher than its forcease EPS according to Commsec data. Can anyone explain how this is possible??

 

[prawn_86]

What I am a bit unsure about though, is TSI's forecast DIV is higher than its forcease EPS according to Commsec data. Can anyone explain how this is possible??

Im fairly sure that the forecast divs are just based on the historic data, whereas the forecast earnings are based on profit guidances released by the company, so there is no doubt the div will fall.

 

[oldblue]

I don't know if it applies in TSI's case but in the past infrastructure funds such as MAP, MIG etc have been known to revalue their assets upwards, borrow on the increased value and increase distributions thereby.
Obviously not so easy in these conditions but might be possible if the assets are held at sufficiently low current levels and an accommodating banker can be found. Or if some asset(s) can be sold off at a good profit.

 

[dirkdiggler444]

Ok, I understand both theories, but from memory reading the last earnings guidance (feb 09), the EPS is increasing relative to 08 figures, the forecast DIV has dropped somewhat though. The bit i'm confused about is the DIV is higher (and has historically been) than the EPS.

2008 2009 2010 2011
EPS 2.8 6.2 8.1 9.8
DPS 18.5 12.0 12.2 12.7


So what you said Prawn_86 about the DIV cut is possible, but that wouldn't expalin the historical 08 figures.

Same with what you said oldblue, by revaluing and borrowing against, shouldn't that have EPS higher than DIV for at least one year??

 

[oldblue]

That would depend on whether or not the revaluation of assets figure was included in EPS, ie Does EPS consist purely of trading earnings only?
Anyone have the answer to that?

 

[geea]

TSI Transfield Services Infrastructure

TSI is one of my favorite stocks yet hasn't been doing much for a couple of months. To me it seems to be stable with a great div, can anyone tell me why this share isn't moving?


Geea.

 

[MOSSuMS]

Re: TSI Transfield Services Infrastructure

TSI is one of my favorite stocks yet hasn't been doing much for a couple of months. To me it seems to be stable with a great div, can anyone tell me why this share isn't moving?


Geea.

It's been trending up quite nicely over the last two months so expect some resistance as it recovers back towards it's old levels (given its 'boring/infrastructure' label and stable earnings profile). I just wish I'd had the guts to get in at the 65c ish level when it felt dirt cheap! Kudos to anyone that did. I'm not a holder in this one but still taking a keen interest.

I feel it has good long term but steady prospects, as TSE picks up, if it can get more of it's quality wind site options developed before there is saturation in the wind part of the renewables market.

NB: It's also probably due to their paying out more than their profit (8.8c per share earnings, 12c distro) which has people worried by association, given the problems with other funds, however well manged this one is.

 

[geea]

Re: TSI Transfield Services Infrastructure

It's been trending up quite nicely over the last two months so expect some resistance as it recovers back towards it's old levels (given its 'boring/infrastructure' label and stable earnings profile). I just wish I'd had the guts to get in at the 65c ish level when it felt dirt cheap! Kudos to anyone that did. I'm not a holder in this one but still taking a keen interest.

I feel it has good long term but steady prospects, as TSE picks up, if it can get more of it's quality wind site options developed before there is saturation in the wind part of the renewables market.

NB: It's also probably due to their paying out more than their profit (8.8c per share earnings, 12c distro) which has people worried by association, given the problems with other funds, however well manged this one is.

When the stock was falling in March i couldn't understand why. I already held at an ave of $0.88. When they fell i started buying more and bought all the way to the bottom.
It's been a great share for me and i believe when people start chasing yields again they will head for the $1.50 range. With a 12c div that still gives them an 8% return.

Here are my March purchases.

9/03/2009 BUY 5000 units TSI @ $.52 $2,621.90 5000 $0.00 Yes
6/03/2009 BUY 4000 units TSI @ $.57 $2,301.90 4000 $0.00 Yes
4/03/2009 BUY 4200 units TSI @ $.655 $2,772.90 4200 $0.00 Yes


Geea.

 

[MOSSuMS]

Back up to the $1.10, and dividends look to be very similar to previous periods at the moment.

I just can't get excited by income stocks, and the whole renewables space is having headwinds (pardon the pun) with rec prices, ETS, lack of a global outcome... Now, if there were a 'peak wind' or 'peak renewables' scenario!

Apart from all that it has formed a good solid base above 90c, and I think $1.20 (from it's current 1.10) is on the cards early next year.

But I just need a bit more 'zing' in a trading stock, and I don't hold/invest my longer term stocks for income.

 

[Julia]

Just flicking through the stock threads, have had a look at TSI. Aren't any of you who are holding this at all bothered by the huge debt level?

 

[MOSSuMS]

Just flicking through the stock threads, have had a look at TSI. Aren't any of you who are holding this at all bothered by the huge debt level?

As worrying huge debt levels go, this one is a pussy cat. It's always had a more conservative gearing than it's peers with an internalised structure (so no maq bank break fees or debt restructures looming) and was lucky with it's refinancing dates compared to the others.

But I hear you - the debt levels are what made these stocks sexy for a while, then made the 'best placed' (i.e. TSI) really cheap at the height of the GFC. If there's another shock then TSI might be a looker again, but the sector as a whole will take a long time to recover it's former gloss and we'll all be watching debt ratios if they lift.

Maybe they will be a good stock for the retiree baby boomers who want income? I just can't seem to peg a somewhat mixed strategy (coal+wind generation+water plants) and cloudy (excuse the pun) climate/energy future yet. So far the best stocks have actually been the contrarians, like coal...

 

[So_Cynical]

Maybe they will be a good stock for the retiree baby boomers who want income? I just can't seem to peg a somewhat mixed strategy (coal+wind generation+water plants) and cloudy (excuse the pun) climate/energy future yet. So far the best stocks have actually been the contrarians, like coal...

Actually the majority of TSI's generating capacity is gas fired so with the wind assets there actually a reasonably clean generator, the debt issues seem to be well under control with the recent capital raising ($110 million @ 70 CPS) and 5 year debt extension...perhaps blue skys ahead. :dunno:

Interesting that in the recent rights issue only 32% of retail share holders took up there rights...it certainly seems as if most holders are only interested in TSI as an income stock, that and the fact that the SP has been in almost continuous decline, combined with the seemingly endless half on half dividend decreases...most retail holders would be pretty pissed off.

TSI Distributions

• Dec-2007: 0.095
• Jun-2008: 0.090
• Dec-2008: 0.050
• Jun-2009: 0.070
• Dec-2009: 0.060
• Jun-2010: 0.040
• Forecast FY11 full distribution of 8.2 cents per security. :dunno:

While it would be terrible to have been holding TSI from the float in mid 2007 at $2.10 all the way down to 64 cents today...it just goes to show just how important timing really is when it comes to entry, and perhaps now is a great time for entry, debt ratio down to 51% etc...looking at the all data chart theres only 2 great entry oppertunitys, Feb-Mar 09 and nowish.

Transfield Services’ additional investment in TSI Fund totals $43.2 million, which represents 61.8 million securities at 70 cents per security

On this additional investment, Transfield Services expects to receive a forecast annualised distribution yield of 11.7 per cent.

http://www.tsinfrastructurefund.com...firmation_of_Transfield_Services_guidance.pdf

The Capital Structure Review Investor Presentation leaves me feeling very upbeat about the future for TSI...These guys have some great assets.

http://www.tsinfrastructurefund.com...al_Structure_Review_Investor_Presentation.pdf
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[So_Cynical]

While it would be terrible to have been holding TSI from the float in mid 2007 at $2.10 all the way down to 64 cents today...it just goes to show just how important timing really is when it comes to entry, and perhaps now is a great time for entry.

Took my own advise today and entered TSI @ $0.61 .. sold out of VRL, added a little extra capital and plonked it all on TSI, happy to hold till it comes good and collect distributions along the way, TSI yielding over 13% at today's share price, and fundamentally in good shape with the recent capital raising, debt extension and asset sale.

 

[Julia]

Took my own advise today and entered TSI @ $0.61 .. sold out of VRL, added a little extra capital and plonked it all on TSI, happy to hold till it comes good and collect distributions along the way, TSI yielding over 13% at today's share price, and fundamentally in good shape with the recent capital raising, debt extension and asset sale.

When do you anticipate it's going to 'come good'? It has been in a solid downtrend for three years!
No wonder the dividend is so high when you consider the debt level and the diminishing DPS and EPS!

Capital Structure ($ 000s)
Total Debt 771,183 Interest: 49,398
Long Term Debt 722,500 (92% of capital)
Preferred Stock 0
Shareholders Equity 60,024 (8% of capital)


Income Company Market Sector
Dividend 17.7% 4.7% 8.6%
Franking 0.0%
Tax adj 9.7% 3.4% 4.9%
Stability 82.4% 91.7% 96.2%


Growth Rates 10 yr 5 yr 1 yr 2 yr Fcast
Sales -- -- -1.8%
Cashflow -- -- 32.6%
Earnings -- -- 193.1% -26.5%
Dividends -- -- -35.2% -11.5%
Book Value -- -- -65.6%
Previous Close 52 Week High 52 Week Low
0.61 0.98 0.56
P/E Ratio
11.30
Sector
Utilities
Market Cap ($ Million)
264

Total Shareholder Return (avg annual rate)
1 Yr 3 Yr 5 Yr 10 Yr
-29.3% -27.2% -- --

Earnings and Dividends Forecast (cents per share)
Curr 2010 2011
EPS 7.2 5.4 3.9
DPS 10.5 9.6 8.2

 

[So_Cynical]

When do you anticipate it's going to 'come good'? It has been in a solid downtrend for three years!
No wonder the dividend is so high when you consider the debt level and the diminishing DPS and EPS!

Capital Structure ($ 000s)
Total Debt 771,183 Interest: 49,398
Long Term Debt 722,500 (92% of capital)
Preferred Stock 0
Shareholders Equity 60,024 (8% of capital)

That must be dated info generated from last years annual...is it from Etrade?

The 3 year down trend chart tells a story...they floated at the top of the market with massive debt as was the norm then, and the SP has struggled ever since...the assets are good and the income is mostly regulated and solid as a rock.

As you know Julia...im a believer in timing and that there's a time to sell, a time to buy, and a time to hold....this is clearly to me anyway, time to buy.

ill post a screen shot and link to there 'Capital Structure Review Outcome Investor Presentation' released in May..it gives a post capital raising and asset sale picture of TSI http://www.tsinfrastructurefund.com...al_Structure_Review_Investor_Presentation.pdf
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