DBS Vickers downgraded Macquarie International Infrastructure Fund to ‘hold” from ‘buy‘ and cut its target price to $0.58 from $0.62, citing unsustainable dividends beyond 2013.
By 11:49 a.m., MIIF shares rose 1.9% to $0.55, and have gained 3.8% since the start of the year.
MIIF declared dividends of 2.75 cents for the first half and guided for a similar payout in the second half, which DBS said was unsustainable as income from its asset Hua Nan Expressway is set to reduce substantially.
DBS also revised down its valuation for HNE to account for potential loss of revenue from a recently proposed regulation which will allow free use of toll roads during major public holidays in China, thus reducing its earnings.
As a result, DBS expects HNE’s earnings to decline by 20% this year and 30% in 2013.
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