Infratil Limited

 

IFT Details
 
Infratil Invests in GGE for the Renewables Development in Europe: Infratil Limited (ASX: IFT) is the owner and operator of the energy, transport, data infrastructure along with social infrastructure businesses in growth sectors. On 5^th February 2020, the company announced an initial investment in Galileo Green Energy, LLC (“GGE”) for the advancement of wind, solar PV energy projects and storage solutions in Europe.Notably, Infratil Limitedtogether with the investment partners Commonwealth Superannuation Corporation, the New Zealand Superannuation Fund along with the Morrison & Co Growth Infrastructure Fund will invest in GGE. The company will hold 40% interest in GGE, with each of its investment partners possessing a 20% interest in GGE. 
 
Other Recent Updates:On 28^th January 2020, Infratil Limited announced that its co-investor Commonwealth Superannuation Corporation sold half of its 48.2% stake in CDC Data Centres to the Future Fund in December 2019. IFT continues to retain 48.2% interest in CDC Data Centres, which is valued between A$1,274 million to A$1,604 million, according to a latest independent valuation.
 
Updated Valuation in CDC Date Centres: In a recent development, the company has released its Independent Investment Valuations in CDC Data Centres (‘CDC’) and FY20 Guidance Update. IFT has advised that its guidance for the underlying earnings before interest tax depreciation amortisation and foreign exchange fluctuation for the year ending 31 March 2020, is expected to be in the range of A$135 million to A$145 million per annum, up from $90 million per annum as at 31 March 2019.
 
Further, based on the most recent independent valuation of CDC as at 31 December 2019, the company expects International Portfolio Incentive Fee at $125 million as compared to $40 million provided in the update given on 13 December 2019.
 
Interim Highlights for the Period Ended 30 September 2019: The company declared a dividend of NZ 6.25 cps to the shareholders in records on 29 November 2019. 
 
IFT delivered operating revenue of NZ$802.4 million compared to NZ$736.2 million in the prior period. Net profit after tax for the period was NZ$88.1 million compared to NZ$106.1 million in the previous period.During the half-year, IFT invested a total of NZ$1.4 billion in Vodafone NZ, Tilt Renewables Limited & CDC Data Centres.
 

Operating Highlights (Source: Company Reports)
 
Net parent surplus from continuing operation came in at NZ$56.4 million for six months to 30 September 2019. Underlying EBITDAF stood at NZ$289.4 million as compared to NZ$284.6 million as compared to the prior corresponding period. Net operating cash flow came in at NZ$68 million. 
 

Key Metrics (Source: Company Reports)
 
Valuation Methodology: P/B Based Valuation
 

P/B Based Valuation (Source: Thomson Reuters), *1 NZD = 0.96 AUD
 
Note: All forecasted figures have been taken from Thomson Reuters, NTM: Next Twelve Months
 
Stock Recommendation: The stock of the company is currently trading close to its 52-week high of $5.400. The stock has a market cap of ~$3.46 billion with an annual dividend yield of 2.76%. The stock has given a positive return of 15.7% and 42.94 in six months and 1-year, respectively. IFT remained on track to distribute dividends to its shareholders and depicted a stable financial position with debt remaining at decent levels.Considering the above factors, we have valued the stock using one relative valuation method, i.e., P/B multiple, and for the purpose, we have taken peer group such as Contact Energy Ltd (ASX: CEN), Genesis Energy Ltd (ASX: GNE), Tilt Renewables Ltd (ASX: TLT), to name few. As a result, we have arrived at a target price which is offering a correction of lower single-digit growth (in % terms). Hence, we have a watch stance on the stock at the current market price of $5.35, up 1.905% on 6^th February 2020.
 
 
 
IFT Daily Technical Chart (Source: Thomson Reuters)

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