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Top Stock Market Highlights of the Week: Keppel Infrastructure Trust, Alibaba and CapitaLand Investment Limited

Royston Yang
·4-min read

Welcome to this week’s edition of top stock market highlights. Wishing all readers a Happy and Prosperous Lunar New Year!

Keppel Infrastructure Trust (SGX: A7RU)

Keppel Infrastructure Trust, or KIT, is acquiring an approximately 98.6% stake in Ventura Motors Pty Ltd for an enterprise value of A$600 million.

Ventura started operations in 1924 and has been in operation for exactly a century with a 32% market share of government contract route revenue in Victoria, Australia.

It has a bus fleet of around 900 buses and transports close to 42 million passengers per annum.

More than 80% of Ventura’s revenues are obtained from serving long-term government route services that do not fluctuate with the volume of passengers or fares collected.

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This means that the bulk of the bus and charter coach service business’s revenue is predictable.

The remaining proportion of Ventura’s revenue comprises bus services for public and private schools (total = 150 schools) along with private charter for regular transit or rail replacement.

This acquisition was made in an attractive market with favourable long-term tailwinds.

Melbourne is Australia’s largest city that is growing fast, with a projected population of around nine million by 2056, up from the current 5.2 million.

The total addressable market for Ventura is also projected to grow by 4.5% per year to A$2.1 billion by 2029 and by 4% per year to A$2.4 billion by 2033.

Contracts with the government are long-term and structured as 8+2 years with automatic two-year extensions if certain key performance indicators are met.

Contract payments are also linked to relevant inflation indices.

KIT’s distribution per unit is slated to rise by 3.4% from S$0.0386 to S$0.0399.

The acquisition will also grow the trust’s asset base by 7% to S$8.7 billion.

This transaction, which is subject to approval, is estimated to be completed by the second quarter of this year.

Alibaba Group (NYSE: BABA)

Alibaba recently announced its financial results for the fourth quarter of 2023 (4Q 2023).

Revenue rose 5% year on year to RMB 260.4 billion for the quarter.

However, Alibaba’s operating income tumbled 36% year on year to RMB 22.5 billion principally because of an impairment of intangible assets for Sun Art Retail Group (HKSE: 6808) and the impairment of goodwill for Youku.

Net profit plunged by 77% year on year to RMB 10.7 billion but if one-off and exceptional items are excluded, net profit would have fallen by just 4% year on year to RMB 48 billion.

Alibaba saw a 3% year on year rise in revenue for its cloud intelligence services to RMB 28.1 billion, while its digital commerce segment saw revenue soar 44% year on year to RMB 28.5 billion.

Its Cainiao Logistics Network division also saw revenue climb 24% year on year to RMB 28.5 billion.

Total revenue missed analysts’ estimates of RMB 262.1 billion, causing shares of the e-commerce giant to tumble by 5%.

In the past year, Alibaba’s shares have plunged by more than a third to close at HK$70.30.

Directors have approved an increase of US$25 billion for the company’s share buyback program in a move that should instil confidence in the business.

CapitaLand Investment Limited (SGX: 9CI)

CapitaLand Investment Limited, or CLI, announced a total of three acquisitions in Southeast Asia and closed a logistics fund in Japan.

Two of the acquisitions involve industrial properties in Singapore by Extra Space Asia (ESA) with the third being a 20-hectare freehold greenfield site in Bangkok, Thailand.

ESA is expanding its portfolio in Singapore and will convert both properties to self-storage facilities in phases.

CLI will continue focusing on identifying investment opportunities to unlock value through the conversion of industrial space for self-storage use.

The Bangkok asset purchase was conducted by CapitaLand SEA Logistics Fund (CSLF), a fund to develop and manage advanced logistics infrastructure supported by integrated smart warehousing solutions.

This acquisition is CSLF’s first and will be used to develop OMEGA 1 Bang Na, CLI’s first logistics property in Thailand.

Construction will commence in 1H 2024 and phase one should be completed by 2026.

Earlier in February, CLI also announced the close of a new core private logistics fund in Japan.

This fund will help to grow the property giant’s funds under management by S$154.8 million.

The fund has several important institutional capital partners in Japan on board and has been deployed to acquire two freehold logistics assets located in Greater Tokyo and Osaka.

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Disclosure: Royston Yang does not own shares in any of the companies mentioned.

The post Top Stock Market Highlights of the Week: Keppel Infrastructure Trust, Alibaba and CapitaLand Investment Limited appeared first on The Smart Investor.