Australian Listed Investment Company Report August 2022

Australia | Aug 08 2022

This story features REGAL INVESTMENT FUND, and other companies. For more info SHARE ANALYSIS: RF1

Download related file: Monthly-LMI-Update_3-August-2022

A Listed Investment Company (LIC) is a listed investment vehicle that offers investors access to a diversified portfolio of shares in other companies also listed on the stock market. Also known as Listed Investment Trusts or Listed Managed Investments.

For comprehensive comparative data tables for LICs please see attached.

LMI Market News

RF1 Adds New Strategy

The Investment Committee of Regal Investment Fund ((RF1)) has approved the addition of the Water Strategy to the Fund. The exposure to the Water strategy will be via the Kilter Water Fund, which is managed by Kilter Pty Limited, a subsidiary of Regal Funds Management. The initial allocation to the strategy is expected to be implemented from 1 August 2022 and is expected to represent less than 5% of the Fund’s NAV (net asset value) initially. The strategy can represent a maximum of 25% of the Fund. The pace at which the Manager will deploy capital is at the discretion of the Manager and dependent on market conditions.

The Water strategy seeks to invest in water entitlements and water allocation assets and to generate investment returns by providing water allocation and water products to irrigation farmers and through appreciation in the value of investment assets. The Investment Committee believes the addition of the Water strategy to the portfolio will increase portfolio diversification and enable RF1 to better deliver on its investment objective.

DJW Seeks to Raise Capital Through SPP

On 19 July 2022, Djerriwarrh Investments Limited ((DJW)) announced a Share Purchase Plan (SPP) to raise capital for investment purposes. Eligible shareholders will be able to invest up to $30,000 in new DJW shares. Shares will be issued at the lower of $2.78 or a 2.5% discount to the VWAP (volume-weighted average price) of DJW shares over the 5 trading days up to and including the close of the offer. Shares issued under the offer will be eligible for the interim dividend which will be paid in February 2023.

Applications are scheduled to close on 18 August 2022 and new shares issued on 25 August 2022.

LRT Seeking to Raise Capital Through an Entitlement Issue

On 26 July 2022, Lowell Resources Fund ((LRT)) announced a non-renounceable entitlement issue for eligible unitholders on a 1-for-3 basis. Participating unitholders will also receive one free unlisted option for each new unit offered. New units will be issued at $1.35 per unit under the Offer and seeks to raise up to $13.2m before costs. Options will have an exercise price of $1.65 and have a maturity date of 4 March 2024.

There will be a Top-Up Facility for eligible unitholders to apply for additional units in the event of a shortfall.

The capital raised will be applied to the existing investment strategy.

The Offer is scheduled to close on 2 September 2022 with new units expected to commence trading on 12 September 2022.

BTI Makes Follow-On Investment in InstantScripts

Bailador Technology Investments Limited ((BTI)) announced it has completed a $5m follow-on investment in InstantScripts, a leading digital healthcare platform. The valuation of the investment has resulted in a 10% uplift to the valuation of BTI’s existing $16.6m investment in the company. The follow-on investment brings the total investment valuation of InstantScripts to $23.3m.

KKC Releases FY23 Distribution Guidance

On 28 June 2022, KKR Credit Income Fund ((KKC)) released its FY23 distribution guidance. KKC has a target distribution of 13.125 cents for FY23, an increase from 12 cents for FY22. Based on the NAV at the date of the announcement, the target distribution represented a yield of 5.82%.

NBI Releases FY23 Target Distribution

On 6 July 2022, NB Global Corporate Income Trust Company ((NBI)) released its FY23 target distribution. The Trust is targeting a distribution of 5.25%p.a., net of fees and expenses based on the NAV as at 1 July 2022. While the target distribution represents an increase on the FY22 target distribution of 4.75%p.a., the target distribution represents a decline in the monthly payment amount based on the NAV as at 1 July 2022.

AFI Maintains Final Dividend For FY22

Australian Foundation Investment Company Limited ((AFI)) reported Revenue of $393.4m in FY22, up 49.7% on the pcp and a Net Profit of $360.6m in FY22, up 53.4% on the pcp.

The Company declared a fully franked final dividend of 14 cents per share, in line with the previous final dividend. The dividend is scheduled to be paid on 30 August 2022. The Board has elected to source 10 cents per share of the final dividend from capital gains on which the Company has paid or will pay tax. The LIC capital gains will equal 14.29 cents per share.

The final dividend takes the full year dividend declared for FY22 to 24 cents per share, fully franked, in line with the previous year. Based on the share price of 2 August 2022, the full year dividend represented a yield of 2.99%. The premium to NTA at which AFI is trading is weighing on the dividend yield.

A Dividend Reinvestment Plan (DRP) and Dividend Substitution Share Plan (DSSP) are available, the price of which will be set at a 5% discount to the VWAP of the share price over the 5 trading days after the shares trade ex-dividend.

AMH Reports Revenue and NPAT Uplift For FY22

AMCIL Limited ((AMH)) reported Revenue of $10.7m in FY22, up 28.2% on FY21 and Net Profit of $8.1m, up 19.8% on FY21.

AMH declared a final fully franked dividend of 2.5 cents per share, in line with the FY21 final dividend declared. The final dividend takes the full year dividend declared for the FY22 period to 3.5 cents per share.

A Dividend Reinvestment Plan (DRP) and Dividend Substitution Share Plan (DSSP) are available, the price of which will be set at a 2.5% discount to the VWAP of the share price over the 5 trading days after the shares trade ex-dividend.

BKI Reports Record Result for FY22

BKI Investment Company Limited ((BKI)) announced a record result for FY22. BKI reported Ordinary Revenue from Investment Portfolio of $62.6m, up 58% on the previous period and an Operating Result after tax and before special investment revenue of $58.1m, a record for the Company and an increase of 63% on the previous period.

BKI declared a final dividend of 3.65 cents per share, fully franked, and a special dividend of 1 cent per share, fully franked. The final dividend takes the full year dividend for the FY22 period to 8.65 cents per share, fully franked, including special dividends, up from 5 cents per share declared for the FY21 period. Based on the share price as at 2 August 2022, the FY22 dividend represents a yield of 4.9%.

MIR Reports Strong Revenue Uplift For FY22

Mirabooka Investments Limited ((MIR)) reported a 45.5% uplift in Revenue for FY22 to $10.3m, however Net Profit only increased 4.4% on the pcp to $6.7m with net losses on the trading portfolio of $0.95m compared to a $2.4m net gain in FY21.

MIR declared a final dividend of 6.5 cents per share, fully franked, and a special dividend of 2 cents per share, fully franked. The total ordinary dividends declared for FY22 is 12 cents per share, in line with FY21.

A Dividend Reinvestment Plan (DRP) and Dividend Substitution Share Plan (DSSP) are available, the price of which will be set at a 5% discount to the VWAP of the share price over the 5 trading days after the shares trade ex-dividend.

CDM Announces 4 Cent Fully Franked Final Dividend

Cadence Capital Limited ((CDM)) announced a final dividend of 4 cents per share for the FY22 period, taking the full year dividend to 8 cents per share, fully franked, a 60% increase on the dividend declared for the FY21 period.

Based on the CDM share price at 2 August 2022, the full year dividend represents a yield of 8.6%, net of franking. The Company has 24 cents per share of profits reserve after the payment of the final dividend.

CDO Announces 7.5 Cent Fully Franked Final Dividend

Cadence Opportunities Fund Limited ((CDO)) announced a final fully franked dividend of 7.5 cents per share for the FY22 period. This takes the full year dividend for the period to 15 cents per share. The full year dividend represented a yield of 6.3% based on the share price as at 2 August 2022.

The Dividend Reinvestment Plan (DRP) will be in operation for the final dividend. Shares will be issued at a 5% discount to the VWAP of the share price over the relevant DRP pricing period.

Magellan FuturePay Closes

During July, Magellan announced it had resolved to terminate FPAY and return capital to investors with the closure taking effect on 20 July 2022.

The assets of FPAY were realised and the net proceeds distributed to investors. The Support Trust that comprised a separate pool of assets that was managed for the purposes of supporting FPAY was wound up and the proceeds formed part of the assets of FPAY. Magellan made an additional payment to those investors who would otherwise receive less than their original investment, after allowing for distributions received. The costs associated with the closure (expect the transaction costs of realising FPAY’s assets) were covered by Magellan and not bourne by FPAY.

Independent Investment Research, “IIR”, is an independent investment research house based in Australia and the United States. IIR specialises in the analysis of high quality commissioned research for Brokers, Family Offices and Fund Managers. IIR distributes its research in Asia, United States and the Americas. IIR does not participate in any corporate or capital raising activity and therefore it does not have any inherent bias that may result from research that is linked to any corporate/ capital raising activity.

IIR was established in 2004 under Aegis Equities Research Group of companies to provide investment research to a select group of retail and wholesale clients. Since March 2010, IIR (the Aegis Equities business was sold to Morningstar) has operated independently from Aegis by former Aegis senior executives/shareholders to provide clients with unparalleled research that covers listed and unlisted managed investments, listed companies, structured products, and IPOs. IIR takes great pride in the quality and independence of our analysis, underpinned by high caliber staff and a transparent, proven and rigorous research methodology.

INDEPENDENCE OF RESEARCH ANALYSTS

Research analysts are not directly supervised by personnel from other areas of the Firm whose interests or functions may conflict with those of the research analysts. The evaluation and appraisal of research analysts for purposes of career advancement, remuneration and promotion is structured so that non-research personnel do not exert inappropriate influence over analysts.

Supervision and reporting lines: Analysts who publish research reports are supervised by, and report to, Research Management. Research analysts do not report to, and are not supervised by, any sales personnel nor do they have dealings with Sales personnel

Evaluation and remuneration: The remuneration of research analysts is determined on the basis of a number of factors, including quality, accuracy and value of research, productivity, experience, individual reputation, and evaluations by investor clients.

INDEPENDENCE – ACTIVITIES OF ANALYSTS

IIR restricts research analysts from performing roles that could prejudice, or appear to prejudice, the independence of their research.

Pitches: Research analysts are not permitted to participate in sales pitches for corporate mandates on behalf of a Broker and are not permitted to prepare or review materials for those pitches. Pitch materials by investor clients may not contain the promise of research coverage by IIR.

No promotion of issuers’ transactions: Research analysts may not be involved in promotional or marketing activities of an issuer of a relevant investment that would reasonably be construed as representing the issuer. For this reason, analysts are not permitted to attend “road show” presentations by issuers that are corporate clients of the Firm relating to offerings of securities or any other investment banking transaction from that our clients may undertake from time to time. Analysts may, however, observe road shows remotely, without asking questions, by video link or telephone in order to help ensure that they have access to the same information as their investor clients.

Widely-attended conferences: Analysts are permitted to attend and speak at widely-attended conferences at which our firm has been invited to present our views. These widely-attended conferences may include investor presentations by corporate clients of the Firm.

Other permitted activities: Analysts may be consulted by Firm sales personnel on matters such as market and industry trends, conditions and developments and the structuring, pricing and expected market reception of securities offerings or other market operations. Analysts may also carry out preliminary due diligence and vetting of issuers that may be prospective research clients of ours.

INDUCEMENTS AND INAPPROPRIATE INFLUENCES

IIR prohibits research analysts from soliciting or receiving any inducement in respect of their publication of research and restricts certain communications between research analysts and personnel from other business areas within the Firm including management, which might be perceived to result in inappropriate influence on analysts’ views.

Remuneration and other benefits: IIR procedures prohibit analysts from accepting any remuneration or other benefit from an issuer or any other party in respect of the publication of research and from offering or accepting any inducement (including the selective disclosure by an issuer of material information not generally available) for the publication of favourable research. These restrictions do not preclude the acceptance of reasonable hospitality in accordance with the Firm’s general policies on entertainment, gifts and corporate hospitality.

DISCLAIMER

This publication has been prepared by Independent Investment Research (Aust) Pty Limited trading as Independent Investment Research (“IIR”) (ABN 11 152 172 079), an corporate authorised representative of Australian Financial Services Licensee (AFSL no. 410381. IIR has been commissioned to prepare this independent research report (the “Report”) and will receive fees for its preparation. Each company specified in the Report (the “Participants”) has provided IIR with information about its current activities. While the information contained in this publication has been prepared with all reasonable care from sources that IIR believes are reliable, no responsibility or liability is accepted by IIR for any errors, omissions or misstatements however caused. In the event that updated or additional information is issued by the “Participants”, subsequent to this publication, IIR is under no obligation to provide further research unless commissioned to do so. Any opinions, forecasts or recommendations reflects the judgment and assumptions of IIR as at the date of publication and may change without notice. IIR and each Participant in the Report, their officers, agents and employees exclude all liability whatsoever, in negligence or otherwise, for any loss or damage relating to this document to the full extent permitted by law. This publication is not and should not be construed as, an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Any opinion contained in the Report is unsolicited general information only. Neither IIR nor the Participants are aware that any recipient intends to rely on this Report or of the manner in which a recipient intends to use it. In preparing our information, it is not possible to take into consideration the investment objectives, financial situation or particular needs of any individual recipient. Investors should obtain individual financial advice from their investment advisor to determine whether opinions or recommendations (if any) contained in this publication are appropriate to their investment objectives, financial situation or particular needs before acting on such opinions or recommendations. This report is intended for the residents of Australia. It is not intended for any person(s) who is resident of any other country. This document does not constitute an offer of services in jurisdictions where IIR or its affiliates do not have the necessary licenses. IIR and/or the Participant, their officers, employees or its related bodies corporate may, from time to time hold positions in any securities included in this Report and may buy or sell such securities or engage in other transactions involving such securities. IIR and the Participant, their directors and associates declare that from time to time they may hold interests in and/or earn brokerage, fees or other benefits from the securities mentioned in this publication.

IIR, its officers, employees and its related bodies corporate have not and will not receive, whether directly or indirectly, any commission, fee, benefit or advantage, whether pecuniary or otherwise in connection with making any statements and/or recommendation (if any), contained in this Report. IIR discloses that from time to time it or its officers, employees and related bodies corporate may have an interest in the securities, directly or indirectly, which are the subject of these statements and/or recommendations (if any) and may buy or sell securities in the companies mentioned in this publication; may affect transactions which may not be consistent with the statements and/or recommendations (if any) in this publication; may have directorships in the companies mentioned in this publication; and/or may perform paid services for the companies that are the subject of such statements and/or recommendations (if any). However, under no circumstances has IIR been influenced, either directly or indirectly, in making any statements and/or recommendations (if any) contained in this Report. The information contained in this publication must be read in conjunction with the Legal Notice that can be located at http://www.independentresearch.com.au/Public/Disclaimer.aspx.

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CHARTS

AFI AMH BKI BTI CDM CDO DJW KKC LRT MIR NBI RF1

For more info SHARE ANALYSIS: AMH - AMCIL LIMITED

For more info SHARE ANALYSIS: BKI - BKI INVESTMENT CO. LIMITED

For more info SHARE ANALYSIS: BTI - BAILADOR TECHNOLOGY INVESTMENTS LIMITED

For more info SHARE ANALYSIS: CDM - CADENCE CAPITAL LIMITED

For more info SHARE ANALYSIS: CDO - CADENCE OPPORTUNITIES FUND LIMITED

For more info SHARE ANALYSIS: DJW - DJERRIWARRH INVESTMENTS LIMITED

For more info SHARE ANALYSIS: KKC - KKR CREDIT INCOME FUND

For more info SHARE ANALYSIS: LRT - LOWELL RESOURCES FUND

For more info SHARE ANALYSIS: MIR - MIRRABOOKA INVESTMENTS LIMITED

For more info SHARE ANALYSIS: NBI - NB GLOBAL CORPORATE INCOME TRUST

For more info SHARE ANALYSIS: RF1 - REGAL INVESTMENT FUND