K-Green Trust – Annual Report 2011

K-Green Trust is a business trust listed on the Singapore Exchange (SGX) on 29 June 2010. The current financial results are based on the first full year or operation ended 31 December 2011. Comparison with previous year may not be all that meaningful since it was 6 months of operation for 2010. Hence, comparison for operational performance is based on company projections for 2011. (Incidentally, K-Green Trust is one of 9 business trusts listed on the SGX. More of that later.)

Background information

K-Green Trust (KGT) was set up by the sponsor, Keppel Integrated Engineering Limited (KIE) which is a wholly-owned subsidiary of Keppel Corporation Limited (KCL). Its investment objective is to invest in “green” infrastructure assets (such as waste management, water and wastewater treatment, renewal energy, energy efficiency and other “green” initiatives) in Singapore and globally with a focus on Asia, Europe and the Middle East. KGT’s initial portfolio consists of Senoko Waste- to-Energy Plant, Keppel Seghers Tuas Waste-to-Energy Plant and Keppel Seghers Ulu Pandan NEWater Plant, all located in Singapore.

Financial Results

Net profit after tax $15.9 million (17.3% higher than projection)
Earnings per unit 2.54 cents
Distribution per unit 7.82 cents
Distribution to unitholders will exceed earnings per unit for the year.
Distribution yield 8.6% (based on closing price at 31/12/2011 – $0.905)
Net Asset value per unit at 31 Dec 2011 $1.11 ($1.16 in 2010)
Unit price at 31 Dec 2011 $0.905 ($1.07 in 2010)
Price to book ratio 0.815 times (0.922 times in 2010)
Unit price last traded 27 March 2012 $0.98 (ex-dividend)

Commentary

Net profit was 17.3 per cent higher than forecast.

Distribution per unit was higher than earnings per unit (7.82 cents against 2.54 cents). Distribution yield based on 31 Dec 2011 traded price was 8.6%. Yield was high due to fall in unit price traded on SGX. Unit price declined to $0.905 from $1.07 between two year-ends. (Price moves in opposite direction as distribution yield.) Price to book ratio dropped to 0.815 times from 0.922 times as a result.

Since end of last year, the unit price improved in 2012 and was last traded at $0.98 (after distribution payout). But this is still lower than $1.07 traded on 31 December 2010.

KGT still has no debt. Cash, bank and deposits balance was $47.6 million ($85 million for 2010).

Comparing with CitySpring Infrastructure Trust

CitySpring is the other business trust closely related to the same kind of business as K-Green Trust. The dividend yield for CitySpring was 9.66% whereas it was 7.94% for K-Green. (Source: SGX website dated 23 March 2012)

Copyright © 2012, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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