Spark Infrastructure Group

Spark Infrastructure Group (ASX: SKI) with a market cap of $3.89bn recently came up with its investor presentation on November 13, 2018.

Financial Metrics:Spark’s adjusted EBITDA was of the order of $420.2 million, up 7.6% in six months ended 30 June 2018 on previous half year. The net operating cash flow was also up 6.9% to $130.3 million as a result of 4.3% higher cash distributions from investment businesses. The group managed to declare an interim dividend of 8 cents, compared with 7.62 cents last year.

Technically, after showing bullish trend from the month of June to August, the scrip turned completely bearish in the month of September. The scrip showed slight recovery in the month of October after touching the lower Bollinger band and making high of $2.315. The scrip is continuing with the recovery phase in the current month of November also.

Fundamentally, the market cap of SKIwas recorded at $3.89bn, with P/E of 39.69x. The group has investment in some efficiently run regulated utilities across Australia and these have defensive and earnings driven capabilities. The group faces some regulatory and tax headwinds but growing distribution yield of about 7% and better returns with support from balance sheet become crucial. Investors now await the December 2018 Final report on rate of return guidelines.SKI with its decent financials along with volatile electricity markets exhibits a “Hold” scenario at the current levels of $2.32 while the group can find support from single digit CAGR in asset base for the period 2018-23 and capex projects with regards to Transgrid.

Infigen Energy

Infigen Energy (ASX: IFN) hasits Bodangora WF project at an advanced stage and due for completion by 1H FY19, which is expected to increase annual production across IFN portfolio by approximately 24% pa once it is fully operational. IFN AGM is scheduled to be held on Friday, November 16, 2018.

Financial Metrics: IFN’s 1Q19 revenue was $66.3m, down about 9% on $72.7m in prior corresponding period. The September 2018 production was down 3.3% owing to weaker wind conditions at Lake Bonney and Woodlawn. However, strong conditions at Alinta WF and a small contribution from Bodangora WF were noted. Meanwhile, revenue grew by 6.8% to $210.1m in FY18 from $196.7m in FY 17 and there was 41.4% growth in Net Profit. At the same time, net debt grew by 31% to $531.2m in FY18.

Technically, the scrip has been on a downtrend from the month of June and has continued the trend for current month also. The scrip is trading at the lower bollinger band and key indicators consolidating in the negative territory now reflect upon an overall bearish trend. At current juncture, the scrip is good to watch and see the movements which can occur on either side.

Projected estimates for the production levels indicate 14% growth in FY19 with Bodangora WF on track. Volatile electricity markets along with forecast of El Nino wind pattern to be faced during FY19 can impact production levels and overall financial metrics. Themarket cap of IFN was recorded at $449.58m, with P/E of 9.8x and beta below 1x. IFN exhibits a “Hold” scenario at the current levels of $0.47.
 

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