Investment highlights Stable cashflows within a regulatory...

Investment highlights

Stable cashflows within a regulatory cycle, due to significant revenue and cost risk mitigants. This includes take-or-pay revenue contracts, revenue socialisation, O&M cost-pass-through, capex inclusion in the regulated asset base, and no force majeure exposure.

Prospective dividend yield of 7% (1H21F DPS annualised vs IPO price), with a policy to distribute 60-80% of Funds from Operations. DBI is targeting 1-2% pa growth in distributions.

DBI also intends to maintain an investment grade credit rating (currently BBB- minimum; note IPO net debt : Regulated Asset Base of 75% vs 60% regulatory assumption). Revenue generated on a per tonne of contracted capacity basis. DBT has never experienced a customer payment default.

Very high EBITDA margins, with opex effectively being corporate costs (terminal costs are a pass-through to users).

Capex is typically rolled into the regulated asset base, generating future revenues. No tax is payable in the prospectus forecast period (and we think over the medium term).

Key upcoming events: The current 5-year regulatory cycle expires in June 2021, and revenues for the next regulatory cycle have not been decided. A final decision is due from the QCA in February 2021 as to whether DBT can:transition to light-handed regulation (DBI negotiates pricing directly with customers offering potential revenue upside, albeit this may lead to QCA arbitration)