Kepler says it remains a puzzle that Cordiant Digital Infrastructure Ltd (LSE:CORD, FRA:86L) continues to trade at a discount to net asset value, despite a strong year of returns and growing investor appetite for digital infrastructure.
The research house was responding to full-year results from the investment trust, which buys and builds core digital infrastructure assets.
Kepler highlighted that the trust looked cheap on an enterprise value to earnings basis, trading at less than 10 times EBITDA against mid- to high-teens multiples for comparable assets in the wider market.
It argued the trust's management fee, calculated on market value and coming out at less than 0.7%, looked like very good value against the private equity-style rates often charged on similar assets.
Kepler also pointed to significant share ownership by management and the board, signalling strong alignment with shareholders.
The note flagged the trust's recent move from the specialist funds segment to a premium listing, which made it eligible for the FTSE 250.
Kepler said the immediate effect should be buying from passive funds, with the longer-term impact bringing the trust onto the radar of active equity managers.
It described the company as close to an operating business as an investment trust can be, with revenue visibility and growth potential making it a natural holding for equity income funds.
While the current yield was a little below average for a UK equity income fund, Kepler said the 10% dividend growth rate more than justified a place in a balanced portfolio.
The research house noted that smaller investors were a growing force on share registers across the infrastructure sector.
It argued that higher capital and dividend growth prospects were becoming more attractive to income investors as interest rates edged only slowly lower.
Kepler said the trust should appeal to growth, value and income investors alike, adding that the persistent discount would remain a conundrum until it closed.
