ALI - Argo Global Listed Infrastructure

[Belli]

Thanks for that summary @Dona Ferentes.

I throw a few more spare $$ at it and collect the dividends which this FY is 8.5c ff. Not an earth shattering LIC and certainly not my largest holdings but a steady payer which fits with me.

 

[Belli]

I assume it is the share registry doing it's usual slack thing. With my other holdings the dividends/distributions are in my accounts before midday, not so with this one or ARG. Silly to be annoyed by such a minor matter but if other registries can do it why not InvestorShare? Only plus is the ability to link holdings in different entities for the same holding e.g. held personally and in SMSF, although that won't be an issue for me in the near future.

ALI has posted its comments on the half-year results. Not much to report really. Essentially, it's "We're doing better than some but probably not as good as others."

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02647403-2A1439523?access_token=83ff96335c2d45a094df02a206a39ff4

 

[Dona Ferentes]

ALI focusing on the solid dividend
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because SP performance has been buffeted by long dated bonds, as interest rates rose .
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Outlook
Although key indicators are currently pointing towards a successful ‘soft landing’ for the global economy, various challenges still confront investors. Inflation remains above-trend and the impacts of aggressive monetary tightening are yet to be fully felt. The flow-on effects of a sustained slow-down in China, the world’s second largest economy, may also impact global growth.

With credit conditions expected to tighten further, Argo Infrastructure’s Portfolio Manager, Cohen & Steers, is focused on assessing the impacts of higher financing costs on infrastructure companies with a preference for stocks with limited near-term debt maturities and manageable refinancing schedules. In recent weeks, the weakening Australian dollar has provided a tailwind for the Company’s net tangible assets as the investment portfolio is unhedged for currency.

Looking ahead, further volatility in the Australian dollar is likely and partly hinges on the state of the Chinese economy. Our portfolio is unhedged to enhance the diversification benefits for Australian investors.

Argo Infrastructure has no debt, over $400 million of assets and a diversified portfolio, positioning the Company to deliver on our objective of providing total returns for long-term investors, consisting of capital and dividend growth.
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[Belli]

Thanks @Dona Ferentes. More funds headed to the bank account in September.

It would appear asset values got hammered which impacted the statutory profit as opposed to the underlying operational profit. At least, I can see where the variations are occurring.

One reason why I don't like unlisted assets, especially in superannuation funds. All fine and dandy until they are required to revalue at fair market value. As you would be aware, APRA is bringing some pressure to bear on that aspect.

 

[divs4ever]

One reason why I don't like unlisted assets, especially in superannuation funds. All fine and dandy until they are required to revalue at fair market value. As you would be aware, APRA is bringing some pressure to bear on that aspect.

unlisted assets normally have a liquidity issue , which conversely is not an issue until forced to sell , and that can be a complication in a superannuation fund , you might be under no financial pressure , but fellow fund members might be absolutely desperate .

i am not sure how APRA will work out a fair compromise , ban unlisted assets from eligible investments , perhaps to the detriment of the financially robust .

sounds like more tweaks to super regulations , and someone will always be disadvantaged

 

[Dona Ferentes]

due to report in Feb..
The latest report gives a macro view:

Following some of the steepest interest rate increases in recent history, the central bank’s abrupt change from a ‘hawkish’ to a more ‘dovish’ stance largely took investors by surprise unleashing a wave of optimism which sent shares sharply higher.
Infrastructure stocks also generated positive returns (up +4.9% in A$ terms) as fears of further rate rises and a ‘higher for longer’ rate environment started to ease.

The asset class was buoyed by falling bond yields which can improve the cost of capital for infrastructure businesses. This is because infrastructure assets can carry considerable debt as they generate reliable income streams from delivering essential services.

All infrastructure subsectors generated a positive return. However, with the risk of a recession receding and the economic outlook improving, the more commercially-sensitive infrastructure subsectors were the best performers including Marine Ports, Railways (specifically freight railways), Airports and Communications (towers and data centres). In contrast, the infrastructure subsectors with more defensive attributes (such as electric and water utilities) trailed in the market rally.
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NTA is around $2.29, so it's still trading at a discount.

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topped up recently

 

[InsvestoBoy]

due to report in Feb..
The latest report gives a macro view:

Following some of the steepest interest rate increases in recent history, the central bank’s abrupt change from a ‘hawkish’ to a more ‘dovish’ stance largely took investors by surprise unleashing a wave of optimism which sent shares sharply higher.
Infrastructure stocks also generated positive returns (up +4.9% in A$ terms) as fears of further rate rises and a ‘higher for longer’ rate environment started to ease.

The asset class was buoyed by falling bond yields which can improve the cost of capital for infrastructure businesses. This is because infrastructure assets can carry considerable debt as they generate reliable income streams from delivering essential services.

All infrastructure subsectors generated a positive return. However, with the risk of a recession receding and the economic outlook improving, the more commercially-sensitive infrastructure subsectors were the best performers including Marine Ports, Railways (specifically freight railways), Airports and Communications (towers and data centres). In contrast, the infrastructure subsectors with more defensive attributes (such as electric and water utilities) trailed in the market rally.
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NTA is around $2.29, so it's still trading at a discount.
View attachment 169549
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topped up recently

The fee for ALI is so high at 1.2%. Other listed infra funds like seem to have the same issue.

VBLD charges 0.48% for a passive listed infra product which the managers of ALI haven't managed to outperform. Can also get Magellans infrastructure fund MCSI for 0.5% if wanting to stay with an active manager, it's done well although couldn't get a chart. What are ALI charging for?

 

[Dona Ferentes]

$360 million assets under management

 

[Belli]

ALI will pay a fully franked dividend of 4c per share (same as pcp) on 22 March.

Statutory loss of $3.9m due to a fall in valuations of investments held.

Yep, a reduction in net realised gains and an unrealised change in value will do that.

 

[Dona Ferentes]

hope the dividend holds ..

 

[Dona Ferentes]

despite the naysayers about fees, (taken on board ), I'm happy to hold, as an allocation in the portfolio. Means I don't have to try and do the work myself... and a 4.2 per cent dividend, yeah!

NTA above $2.40 and trading below that.

In May, global listed infrastructure gained +2.4% (in A$ terms) outperforming broader equities, both globally (up +2.0%) and locally (+0.9%).
The Communications (towers and data centres) subsector surged +9.0%, reversing recent losses as investors sought value in prior market laggards. Electric utilities also rose sharply (up +6.2%), spurred by enthusiasm about increasing demand for electricity to support the rapidly expanding growth of artificial intelligence applications.

Holdings in both subsectors contributed positively to Argo Infrastructure’s portfolio performance, up +2.5%.

 

[Dona Ferentes]

Global infrastructure stocks rose sharply in July (up +8.8% in A$ terms) as optimism that the US Federal Reserve would start cutting interest rates as early as September ramped up. Broader global and Australian equities also had a strong month, gaining +4.1% (in A$ terms) and +4.2% respectively, although lagged global listed infrastructure.

Unsurprisingly, the more interest rate-sensitive infrastructure subsectors were the best performers. These included Communications (towers and data centres) companies, which were also buoyed by strong earnings reports. The subsector constitutes 9.9% of Argo Infrastructure’s portfolio, versus 7.6% of the benchmark index, and contributed positively to portfolio performance during the month.

Argo Infrastructure will report its full year result on 26 August 2024.
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NTA went from $2.37 to $2.56 in July. ... still trading under; latest was $2.21

 

[Dona Ferentes]

Argo Infrastructure will report its full year result on 26 August 2024.
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NTA went from $2.37 to $2.56 in July. ... still trading under; latest was $2.21

like Argo ARG, their infrastructure LIC has taken a more active promotional path in announcing a weekly NTA (unaudited) within a day or two of week's end.
- still holding a 10+ percent discount, and now $2.25.
- expecting 4c dividend in the annuals, on Monday

 

[Bellcose]

ALI will pay a $0.05 dividend on 27 September. It is franked at 25% due to lower annual turnover.

 

[Dona Ferentes]

trading around $2.35, NTA estimate around $2.58

from the AGM:
Share price relative to NTA
In our view, Argo Infrastructure’'s current share price discount to NTA is partly a function of the recent underperformance of infrastructure stocks relative to broader equities following sharp increases in interest rates, which remain high. However, as central banks worldwide begin or continue cutting official interest rates, it is reasonable to expect that returns from global infrastructure stocks will revert to long-term averages.

At the same time, listed investment companies (LICs) across the ASX are currently trading at larger-than-average share price discounts to NTA. One of the main factors driving this trend is the increased relative appeal of cash investments due to higher interest rates now available on term deposits and other cash investments.

We believe that Argo Infrastructure’s current share price discount to NTA is largely cyclical due to these two factors.