Infratil [ASX:IFT] Talks ‘Strong Thematic Tailwinds’ for FY24

Despite ongoing macro challenges, New Zealand investment group Infratil [ASX:IFT] spoke of strong results across its portfolio for FY23. IFT expects ‘strong thematic tailwinds’ to positively impact its outlook for FY24.

The group said it achieved a net parent surplus from its operations to NZ$643.1 million for the year, thanks to a significant leap in earnings and gains year-on-year.

IFT shares were up 2% earlier on Monday morning, trading for around AU$9.08.

The investment group has leapt by 12% in share value in the last month and 23.5% for the first five months of the year to date, sitting at a similar advantage to the wider market average:

Source: tradingview.com

Infratil delivers results, talks outlook and cuts incentive fees

Infratil posted results reaching for the top end of its guidance for FY23, with a net parent surplus of NZ$643.1 million, which it said was driven by growth in earnings from associates and gains on the sale of its Trustpower retail business and sale of One Tower assets.

Proportionate EBITDAF had increased 11.9% year-on-year from NZ$474.9 million to NZ$531.5 million on high data centre performance and positive airport delivery.

CEO Jason Boyes said the group continues to aim ‘unapologetically’ high, achieving despite a challenging macro environment with management focused on driving results.

Boyes pointed out its CDC portfolio expanded significantly to meet new and existing customer demand, bringing capacity online and continuing strong financial growth to 33% EBITDAF growth through expanding Auckland campuses.

2023 was also flagged as a ‘year of change’ with its Vodafone brand rebranded to One New Zealand and Longroad Energy’s US$500 million capital raising and new MEAG investor.

Boyes said hydrological conditions, wholesale pricing, and hedging contracts contributed to a stronger net energy margin for Manawa Energy, yet this was offset by a fall in carbon prices and loss of some revenue, even with increased development and corporate overheads.

In terms of its diagnostic imaging business, the team expects to see a return to pre-COVID scan volume growth rates in FY24.

Mr Boyes said:

‘The industry fundamentals remain strong, the health system reforms are gathering pace, and the healthcare system and radiology referral network is continuing its recovery from covid.’

Similar conditions were noted for the travel industry, with the first year of restriction-free travel contributing to better results at airports for the financial year:

‘In its first full year of travel without covid restrictions since the start of the pandemic, Wellington Airport hosted 5.3 million passengers, with 4.7 million domestic passengers and 560,000 international passengers passing through its terminals. This helped drive an improved financial result from the previous year, with EBITDA up 57.6% to $89.6 million.’

This year, about $1.4 billion was deployed across the portfolio, primarily across Infratil’s existing digital and renewable businesses. Boyes said this is the investment ‘shareholders should be looking at’ as the group moves closer to generating returns over the next decade.

He also addressed ‘thematic tailwinds’ and the climate change commitments of governments:

‘Thematic tailwinds continue to provide valuable options for growth across Infratil’s portfolio. Climate commitments from governments and societal demands are growing and will accelerate the transition to renewable energy, resulting in an unprecedented level of investment.

‘In the last 12-months we have seen the United States-led Biden Administration’s climate agenda receive a US$369 billion boost in federal funding towards clean energy and climate change mitigation.

‘The European Union has also increased its funding, with over €400 billion now allocated to the clean energy transition, which we expect to continue globally.’

Infratil has agreed to make amendments to incentive fee obligations to carry forward the impact of underperformance for unrealised assets.

The amendments will be applied to FY2023, translating to a reduction in incentive fees of NZ$5.7 million.

The group declared a fully franked final dividend of 12.5 cents a share for the FY23 year and forecasts FY24 EBITDAF of AU$260–270 million.

Source: IFT

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Regards,

Mahlia Stewart,

For The Daily Reckoning