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John Laing warns on portfolio value

However, the infrastructure investor pointed to a good pipeline of investment opportunities
December 13, 2019

Infrastructure investor John Laing (JLG) lost almost a fifth of its market value on the day it revealed that net asset value (NAV) for the year is expected to be “marginally below” market expectations. That is before the negative impact of foreign exchange – with the effect of a stronger pound from July to November hitting the value of the group’s portfolio by around £50m. NAV had come in £1.6bn as of 30 June 2019, or 325p per share.

IC TIP: Buy at 362p

John Laing explained that there “remains uncertainty over a number of factors” that will affect its full-year results. Internally, these relate to the final level of planned “value enhancements”, and the outcome of discussions on certain public-private-partnership (PPP) projects. Externally, the group pointed to a fall in power price forecasts, which are currently expected to have an adverse impact of around £40m, and an approximate hit of around £7m from changes in macroeconomic and tax assumptions.

That all said, John Laing cited good progress on certain projects, including Sydney Light Rail and New Royal Adelaide Hospital. It also highlighted a strengthening pipeline of investment opportunities, noting that it was on schedule to achieve its three-year investment and realisation goal of £1bn by 2021. It cited £157m of investment opportunities completed in four projects – in line with the number previously announced for the year to October, but down from broker Peel Hunt’s £180m estimate. The group has taken £132m in proceeds from sales completed to date, and other disposal processes are in the works “to take advantage of strong secondary markets”.