Cordiant Digital Infrastructure Ltd (LSE:CORD) was tipped by Liberum after it had another read of last week's interim results statement, with dividends ahead of schedule and the valuation conservative.
Saying it is "better to under-promise and over-deliver", the broker noted that CORD has "scarcely put a foot wrong" since its launch in 2021, but its shares have been the second worst-performing fund within the Infrastructure peer group over the past year "despite strong industry tailwinds and good NAV per share progression in an unfavourable FX period".
Reading through the interim results again, analysts said the investment trust is delivering "exactly as it set out to do, the balance sheet is strong, and the shares do not appear to ascribe much option value to the potential for selective divestments at CRA and Emitel".
It is ahead of schedule on dividends, having reached the target of 4p per share dividend by its fifth financial year, which is 1.2x covered by adjusted cash flows.
The core platforms are progressing well operationally, the analysts added, "and there is no funding crunch for growth capital expenditure".
On valuation, the Liberum team said one interpretation of CORD’s share price discount is that it reflects some additional premium on top of the 9.8% weighted average cost of capital.
"A reasonable counter to this is that at a 34% discount to NAV, we estimate that the shares imply a <9x EV/EBITDA multiple. The portfolio acquired at a 10.2x EV/EBITDA multiple."
As at 30 September 2023, Emitel was valued at an enterprise value of 9.7x and CRA 11.1x, with Hudson Interxchange currently having a negative EBITDA.
Hudson, the New York-based data centre interconnect hub, has been a "slight blight" on recent performance, marked down in the interim results as performance has not been as strong as expected, but CORD has taken measures to address this, installing a temporary CEO from within the investment manager’s group.