John Laing Group Plc (LON:JLG) trading update and recent disposal of a wind farm provided year-to-date figures for investment commitments and realisations. The figures confirmed the strength of the underlying infrastructure project market and highlighted the increased level of activity within the business. We have revised our forecasts and now expect a special dividend payment of 5.3p/share (6.5% of £299m), offering a yield on the final and special payments combined, of c 3.3%. We expect further NAV growth in FY17 and beyond, and believe JLG’s rating is undemanding.
Increased investment realisations and commitments
So far in FY17, JLG has completed realisations of £299m (previous guidance £200m) and made investment commitments of £340m (guidance of £200m). We have revised our financial forecasts for FY17 to reflect these updated figures and a small reduction in the pension deficit (from £30m to £22m). Due to the increased level of realisations, we have increased the ‘special’ element (based on 6.5% of £299m) of our forecast for JLG’s DPS for FY17. JLG has guided towards a ‘special’ payment of 5-10% of realisations and in previous years has paid c 7.5%. We assume, given the scale of disposals in FY17, JLG may pay a more conservative percentage of realisations, and now forecast final and special DPS payments of 3.81p and 5.30p, respectively. Our forecast for investment and realisations in FY18 is unchanged (£200m), although with an investment pipeline of c £2bn and commitments running at £350m, our assumptions for FY18 face upward pressure.
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