BBI - Babcock & Brown Infrastructure

dhukka said:

The share price on the other hand whilst it has been a dog, may do extremely well for those who bought in at the lows, if the company is able to survive and ekes out the the paltry returns projected by the likes of Wilson HTM.

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Clap hands. You have finally agreed this is a risk/reward situation and my large position at low prices MAY in fact be a very good investment. BBI is not for everyone but it tickles my fancy.

banska bystrica said:

Clap hands. You have finally agreed this is a risk/reward situation and my large position at low prices MAY in fact be a very good investment. BBI is not for everyone but it tickles my fancy.

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Banska, look back through the thread, I have consistently acknowledged that if BBI survives and ekes out the kind of profits Wilson HTM is forecasting, then it is probably worth significantly more than 5c. I have not changed my thinking on that at all. Given the large amounts of intangibles on the balance sheet due to acquisitions and the extremely low returns the business generates, I think it is reasonable to question whether book value can be realised for some of these assets.

dhukka said:

Banska, look back through the thread, I have consistently acknowledged that if BBI survives and ekes out the kind of profits Wilson HTM is forecasting, then it is probably worth significantly more than 5c. I have not changed my thinking on that at all. Given the large amounts of intangibles on the balance sheet due to acquisitions and the extremely low returns the business generates, I think it is reasonable to question whether book value can be realised for some of these assets.

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Yes I agree it is reasonable to question whether book value can be achieved but I think it all boils down to the sale of DBCT and/or PD Ports and what prices they achieve for those.
The major reason the stock is 6c is because the overall market also questions the book value and in fact doubts whether book value can be achieved.

Viva_Las_Vegas said:

Correct. My point is that despite depreciation my home will most likely sell more than what i paid for it,

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Sorry to pull you up on a technical point, But buildings and plant equipment do suffer depreciation, and require maintainance and replacement over the years to hold value.

You many sell your house for more than you bought it, but that is because the land it is sitting on has risen in value.

The building itself, including carpets, curtains, paint work, bathrooms and kitchen fittings, plumbing, wiring, fencing, driveways etc.etc all constantly go down in value over the years.

i have just picked up some beppa, my holding is now 50/50 split between bbi and beppa.

Now we wait

Interesting thread so far, but it has degenerated a bit, so i am going to try and distil a few valid points.

a) If you run a business from your house and claim part of it as an office yes you get deductions for expenses. but be aware that if you sell the property and make a capital gain part of that gain will be attributed to the business and will be assessable. This is always the problem with claiming for a home office.

b) I think it is generally accepted I am positive about BBI. However what I notice is that many persons have negative views on BBI yet minimal argument or facts are put forward to support this view. How can you expect an investor to consider such views if they are are not substantiated with reasonable facts or at least facts that can be interpreted.

c) There seems to be a lot place on the Euro 25M loss of Gascon. My view is so what? It is only one small component of a large group, as has been pointed out already you can pick any blue chip miner and find loss makers that have been significantly written down.

d) Regarding any potential impairement, why not assume a pending impairment charge of $1B. Even on this basis BEPPA and SPARCS are fully paid out (including accrued interest) and BBI would be worth say 75% of remaining NTA ie 44 cents (NTA $2.4B-$1B x 75%). So what is the relevance of $50M? Step back and look at the big picture, overall assets sold should realise book. That means there will be a few ups and downs but will average out to book. (IMO it will be significantly above this, but lets be cautious).

So a return of 44cents on BBI and full payment of BEPPA and SPARCS is pretty good in my books.

e) We forget, we are in the worst possible financial conditions possible, unimagined in anyones books a year ago and I ask the question, is BBI surving? Yes it is and conditions will gradually improve. In fact with the massive amount of money literally printed and injected into the system money will start to lose its value and asset prices may increase accordingly. This will be reflected in an increase in BBI NTA

f) Debt & financing-It is common knowledge that regulated infrastructure assets are highly geared because of their consistent cashflows. I expect this to continue. the banking industry may be tightening money supply now, but in time it has no choice but to lend to earn returns for shereholders. Yes they will be more prudent and cautious, wanting secure cashflows etc to service debt and quality security. The type of cashflow and security offered by blue chip infrastructure assets.

g) As a qualified accountant with decades of experience in the REIT and infrastructure industry all I have to say about the accounting arguments are that they are red herrings, detracting fom the big picture.

h) I do not rely on charts because they assume the future will follow past trends, I know many will swear by its reliability. However in the current climate all I can say is how can you rely on a chart when we have never had this set of circumstances before, hence there are no previous similar trends.

I know many will disagree with this post, but all I am interested in is facts or a reasoned opinion.

Cheers

The MCG announcement has just made BB a very happy lad indeed and is very bullish for BBI and like stocks (quality assets smashed well below NAV and high debt). $2.50 offer for my shares bought at sub $1. I'm not waiting around though, took the $2.30 average. You see, there are buyers for quality assets. The model of MCG is very similar to BBI.

I will be ploughing the MCG profits into BEPPA. I just cleaned out the seller at 7.4c with a 150,000 buy order.

MCG's NAV is $5.00 so the takeover is at 50% of NAV.
50% of NAV for BBI is 50c. You see what's possible? No guarantees of course but plenty of upside.

Well done BB. I was considering some MCG last month, but got some SHL instead.

Will drink a beer to your profit after work.

Mitsimonsta said:

Well done BB. I was considering some MCG last month, but got some SHL instead.

Will drink a beer to your profit after work.

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Thanks Mitsimonsta. It validates my research on these sorts of stocks. The instos couldn't smash MCG down quick enough through 90c. That was an over-reaction just like BBI is an over-reaction at 6c.
It gives the market some idea about infrastructure stocks and their true value. I am not saying BBI should trade at NAV in a bear market but 50% of NAV is the sort of area I am looking at for BBI, not 5% of NAV that it is trading at now.

I had about 10% of what I've got in BBI/BEPPA in MCG but it was still very nice indeed. Gives me more ammunition to keep buying BEPPA. I might be wrong but I'm willing to be there to find out.

You are most welcome BB. Oh, and Mits or Mitsi is fine by me too.

Sold my RIO & FMG to go into BEPPA for about $250 profit on those with two $500 parcels.

Unfortunately, there's not much BEPPA going at 7.2c now, cleaned out the last seller at the price....

EDIT: got my first $1300 parcel - 17,777 units @ $0.07200

Well dome Mitsimonsta. You will do well. Be patient.
I bought another 100K at 7.2c and it closed 7c. That's fine. It's been a really fruitful day buying at 6.6c, 7.4c and 7.2c. Slowly chipping away at BEPPA and waiting for asset sales by June 30.

banska bystrica said:

Well dome Mitsimonsta. You will do well. Be patient.
I bought another 100K at 7.2c and it closed 7c. That's fine. It's been a really fruitful day buying at 6.6c, 7.4c and 7.2c. Slowly chipping away at BEPPA and waiting for asset sales by June 30.

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Well done on MCG

You have built quiet a holding in BBI and BEPPA.

The difference between BBI and BEPPA got down to 0.9cents at one stage today, just before I bought.

investorpaul said:

Well done on MCG

You have built quiet a holding in BBI and BEPPA.

The difference between BBI and BEPPA got down to 0.9cents at one stage today, just before I bought.

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Paul,
BEPPA holders are currently owed 3.1c in deferred interest payments by BBI. To be buying BEPPA at less than a cent more than BBI is value. You just have to do the sums. BEPPA must be paid this interest before even a single cent can be paid in distributions to BBI holders plus you have the added security of being higher up the food chain in the case of liquidation. Not that I think for one minute liquidation is happening but BEPPA has to be worth something extra for that added security.

Mitsimonsta said:

Well done BB. I was considering some MCG last month, but got some SHL instead.

Will drink a beer to your profit after work.

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Geesh guys, you could have told me about MCG so I could have at least looked at it...now I am going to sulk.:

If you dont do so next time I'll set the death spiral onto you!!

Cheers

banska bystrica said:

I bought another 100K at 7.2c and it closed 7c. That's fine. It's been a really fruitful day buying at 6.6c, 7.4c and 7.2c. Slowly chipping away at BEPPA and waiting for asset sales by June 30.

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PM sent.

I will be looking to add another $1700 or so to my BEPPA holding in the next couple of months. I don't earn a big pay packet, so money goes into stocks when I have it, and when something dips significantly. I usually have $500-$600 to spend each month.

I wish I had the cash to grab another lazy '100K' units.

Hardyakka,

If you are feeling down and feel like doing something reckless I could always sell you 20,000 of my remaining HFA shares at 16cents lol

Let me know if you want em!

Viva... you need to lay off the coffee and stop selling stocks at the first sign of trouble. HFA is another undervalued stock.

If you have a margin loan account, stuff them away in there and come back in 12 months time.

Viva_Las_Vegas said:

Hardyakka,

If you are feeling down and feel like doing something reckless I could always sell you 20,000 of my remaining HFA shares at 16cents lol

Let me know if you want em!

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Viva,

HFA, is that the company called "Have Faith Always"?? Somehow something tells me that you want to flog me a stock in a DEATH SPIRAL. Methinks I will have to decline your generous offer....but I do know a forum where they will be snapped up...for a small fee I will tell you.

Cheers

Mitsimonsta said:

Viva... you need to lay off the coffee and stop selling stocks at the firt sign of trouble. HFA is another undervalued stock.

If you have a margin loan account, stuff them away in there and come back in 12 months time.

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Hmmm..seems I may have spoken too soon. I will have a look at HFA and let you know my thoughts.

Cheers

They closed at 13c Yakka... not like he or the stock is on a death spiral at all.

If they come back to only half what they were, he's be on an easy 3-bagger, possible 5-bagger.

You don't get the EDE's of this world often, you cannot make 100% overnight. It is simply unrealistic.


Anyway, we are miles OT here.... Back to the discussion at hand: BBI and BEPPA.