HICL Update: Better Results, Less Discount
From Penalty Box to Watchlist.
A quick update on HICL.L which is a current PYE UK holding and which I have written about a couple of times in the last 6-months.12
The recent annual results were strong enough to change the tone, but not enough to make this an automatic buy.
NAV per share rose to 160.2p, total NAV return was 10.3%, and dividend cash cover improved to 1.10x excluding disposals and 2.38x including disposals. That answers one of my biggest questions. The dividend is not just being propped up by hope. The underlying portfolio generated enough cash to cover it.
Capital allocation was also sensible. HICL completed £536m of disposals during the year, including the A63 Motorway sale at a 21% premium to carrying value. Buybacks totaled £103m, adding 1.6p to NAV per share. The fee structure is also improving, with the management fee moving to a fully market-cap-based model. That better aligns the manager with shareholders while the shares trade at a discount.
The market noticed. HICL is up around 4% today (27th May, 2026)
That means the discount has already narrowed. Using the new 160.2p NAV and a share price around 134p, the discount is now roughly 16%, not the 20%+ level that made the setup more obviously compelling. The FY27 dividend target of 8.50p gives a forward yield of about 6.3% at this price.
So the investment case is cleaner, but less cheap than it was yesterday.
For PYE, I still would not call this core ballast without a fresh underwrite. Management is clearly leaning harder into total return, growth assets, and active infrastructure ownership. That may be the right strategy, but it is not the same simple HICL thesis I originally wrote up.
My updated stance: HICL is back on the watchlist to potentially add to my position, but I am not chasing today’s move. The results are good. The discount is still meaningful. The dividend looks better covered. But after a 4% rally, this is no longer a table-pounding discount capture setup.
Patience still wins. I want to wait to what we hear at the capital markets seminar in July and more detail on the forward strategy, and continued evidence that cash cover stays above 1x without leaning on disposals.
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Disclaimer
The analysis and commentary shared here reflect my own research and investment approach. This content is provided for informational and educational purposes only and should not be considered financial advice, a recommendation to buy or sell any security, or an endorsement of any particular strategy. Nothing here is tailored to the investment needs or circumstances of any individual. Charts, graphs, or figures are illustrative only and should not be relied upon as the basis for investment decisions. Please consult a qualified financial advisor before making investment choices that may affect your personal financial situation.
I am following this and INPP but want to increase my holding if and when I can get a 7% yield, so need to be patient and see if inflation / gilt yields increase later in the year. In the meantime happy to keep buying PHP at 8%+ yield.