One Infrastructure Investment Company With Decent Growth Prospects

As the market participants are aware, the outbreak of the COVID-19 pandemic has impacted numerous sectors and several companies halted their growth plans. Lockdowns were imposed so that the spread of this deadly virus can be restricted. However, some companies are navigating the challenging market environment well and they are now expected to post decent growth moving forward. This company as well as its portfolio companies undertook capital expenditure and investment, despite the challenges as well as restrictions related to the COVID-19 pandemic. The stock of this company has witnessed a rise of ~64.08% in 1 year. Also, in the time frame of 9 months, the stock rose by ~56.5%.  

Infratil Limited

Summary

  • IFT remains hopeful of further rise in dividends following the increase in cash earnings from CDC Data Centres and Vodafone NZ as well as contributions from recent investments in diagnostic imaging are received.
  • IFT has acquired 56.25% stake in Australian based Qscan for A$289.6 Mn (NZ$309.6 million) on 22nd December 2020.
  • IFT’s total shareholder return for the year stood at 91.9%, which comprised 4.3% after-tax dividend return as well as 87.6% capital gain, including the rights issue.

Infratil Limited (NZX: IFT) owns renewable energy, digital infrastructure, airport and social infrastructure businesses in growth sectors and these businesses operate throughout Australia, New Zealand, the United States and Europe.

FY21 Results Performance (For the Year Ended 31 March 2021)

Despite a challenging year, the company’s businesses delivered decent performances, and the company posted an increase in proportionate EBITDAF from continuing operations to $398.8 million in FY21 from $370.2 million in FY20. The impact of coronavirus pandemic on the company’s portfolio (mainly for Wellington Airport and Vodafone NZ) was offset by the robust cost control as well as the demand for the high-quality data centres facilities, which supported CDC Data Centres to post an earnings growth of 25%.

However, the company’s share of the net loss stood at $49.2 million, driven by the unrealised energy derivative losses at Trustpower as well as higher management incentive fees.

Financial Snapshot (Source: Company Reports)

Completion of acquisition of Pacific Radiology

IFT, on 29 April 2021, updated that it has executed a conditional agreement to acquire between 50.1% and 60% stake of Pacific Radiology Group Limited. The acquisition would be from the existing doctor shareholders.

In the release dated 31st May 2021, the company has confirmed that the acquisition of Pacific Radiology has been wrapped up for the total cash equity consideration of NZ$313.6 million. Notably, the consideration includes estimated transaction costs as well as is subject to the usual post-completion adjustments for the working capital as well as net debt.

Also Read: 5 Interesting NZX stocks garnering investors’ attention - HMY, PPH, GTK, CGF, IFT

Increase in Guidance

In the release dated 19th May 2021, the company has given guidance for the year ended 31st March 2022 and stated that proportionate EBITDAF is expected in the range of $470 Mn-$520 Mn (excluding the Tilt Renewables and Pacific Radiology). The company continues to be willing to deploy ahead of the mainstream infrastructure market as well as take on more complex operating businesses in order to place the shareholders in the next generation infrastructure.

Completion of Acquisition of Shares by Morrison & Co

The company has earlier approved the on-market acquisition of $20 Mn of IFT shares on behalf of the certain Morrison & Co executives as well as Morrison & Co. In the release dated 24th June 2021, the company has advised that Morrison & Co has wrapped up the acquisition of shares under that approval, as well as acquired 2,646,754 shares for the total cost of $19,999,994.34.

Do Read: Why These Are the 5 Most Talked-About Stocks On NZX- PFI, ARG, IFT, VGL, KFL

Stock Information

Despite a challenging FY21, IFT along with its portfolio businesses undertook capital expenditure and investment worth $1,235 million. This includes $250 Mn in digital infrastructure and technology, $590 Mn in renewable energy, as well as $310 Mn in the initiation of the new diagnostic imaging platform via Qscan Group. It has declared a final dividend of 11.5 cps, which reflects the 4.5% rise on the prior year. This implies confidence in the future forecast cash flows.

The company, on 25 May 2021, has declared an offer of upto $50 Mn of the unsecured, unsubordinated fixed rate Infrastructure Bonds with the maturity date on 15 December 2027, with an option to accept up to the further $50 Mn of the oversubscriptions at the company’s discretion.

The offer comprised the general offer as well as an exchange offer under which the holders  holding infrastructure bonds maturing 15th June 2021 could elect to reinvest in the new infrastructure bonds. As per the release dated 16th June 2021, IFT has confirmed that the general offer is closed. Notably, infrastructure bonds offered under the general offer would be issued on 6th July 2021.

In the release dated 21st June 2021, it was mentioned that Trustpower Limited, in which IFT is the 51% shareholder, mentioned the sale of the gas, telecommunications as well as retail electricity supply business (excluding the supply of electricity to the commercial as well as industrial customers) to Mercury NZ Limited.

The stock of the company ended the session at NZ$7.630 per share, up by 0.39% on 25th June 2021.

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