IFT - Infratil

[huxley]

Interesting that the DRP is not running again, does this reflect managements view of the share price? Or just reflect the $400m cash balance.

[3141592]

My take outs from the interim and updated thoughts...

Firstly the discussion around book value on this forum seems odd. The assets have largely been in play for years - and have been high growth capital assets independently valued at a significant premium to any original investment. Further time and time again IFT sells these assets at a very significant premium to these independent valuations. Commentary referring to historical IFT % of Net Assets seems at best irrelevant bearing little relationship to their current ‘commercial’ value. In my opinion, the nature of the current portfolio is quite different from IFT of old - further untethering the connection to book values. This is an asset mix that largely is growing rapidly by any infrastructure metric and is therefore voracious in its financial capital appetite. Not a bad thing. Don’t jam up dividends, reinvest for growth - and that’s what they’re doing.

We’ve now heard from Will Smales (via press articles) and Allison Gerry in her detailed commentary on this interim report about their focus on SAAS businesses for future investment - where resilient business models and business dependencies give them similar characteristics to Infrastructure assets. I’m looking forward to seeing if the next year bears fruit in this area and they make a significant play and also unwind from (is it a disciplined or lazy) low gearing! There should be some opportunistic plays in the current global environment.

I suspect they’ll do well out of the divestment from Retire AU - it’s good to see it performing strongly at such a critical juncture. As much as I think they could do well in the long term holding - only they know their capital structure and capital priorities - so i trust them to make the right call, and I suspect it’ll be one that has analyst upside.

Data Centre growth remains stellar - i love the sovereignty defensive position where the AU superannuation fund co-shareholder gives both Govt and tier 1 Corporate a sense of trust and stops the likes of Microsoft / Amazon et al coming aggressively into this valuable niche. Or at least not easily… Despite the slight delay to EBITDA generation - they’ve flagged demand continues to surge - and they’re accelerating their capital deployment (Sydney investor presentation). Looks like there’s lots more headroom, and it remains one of the jewels in the IFT crown. The above forum commentary about a fully priced IFT asset - well let’s see where this sits in 2-3 years. And we’ll see how fully priced it is!

Vodafone exit - imo remains an interesting proposition - within the next 2 years? On the downside of interest rates - after they’ve extracted the best of the IT transformation and cost out - what a return! Basically paid for itself and they own half of it. This will be the most successful local utility ownership period on record!

The only fly in the ointment remains the health sector - but the factors are clearly beyond reasonable control and it looks to be very short term in impact. They have high conviction in the segment and I’m interested to see how the NZ Govt health funding changes play out to assist with more preventative treatments, surely this will be beneficial…

The airport as an odd part of the portfolio - maybe - but it’s a very stable cash generating unit that would normally (outside a pandemic) underwrite the small dividend yield model. Given so much of the portfolio is capital intensive - i’d be surprised to see them give it up and finding a local buyer, or one that would get OIO approval feels quite hard…. But who knows.

I didn’t listen to the interims, and normally can glean a little more intel during the oral presentation and the follow up presentations, so this is just from scanning the current online info.

[Swala]

My take outs from the interim and updated thoughts...

Firstly the discussion around book value on this forum seems odd. The assets have largely been in play for years - and have been high growth capital assets independently valued at a significant premium to any original investment. Further time and time again IFT sells these assets at a very significant premium to these independent valuations. Commentary referring to historical IFT % of Net Assets seems at best irrelevant bearing little relationship to their current ‘commercial’ value. In my opinion, the nature of the current portfolio is quite different from IFT of old - further untethering the connection to book values. This is an asset mix that largely is growing rapidly by any infrastructure metric and is therefore voracious in its financial capital appetite. Not a bad thing. Don’t jam up dividends, reinvest for growth - and that’s what they’re doing.

We’ve now heard from Will Smales (via press articles) and Allison Gerry in her detailed commentary on this interim report about their focus on SAAS businesses for future investment - where resilient business models and business dependencies give them similar characteristics to Infrastructure assets. I’m looking forward to seeing if the next year bears fruit in this area and they make a significant play and also unwind from (is it a disciplined or lazy) low gearing! There should be some opportunistic plays in the current global environment.

I suspect they’ll do well out of the divestment from Retire AU - it’s good to see it performing strongly at such a critical juncture. As much as I think they could do well in the long term holding - only they know their capital structure and capital priorities - so i trust them to make the right call, and I suspect it’ll be one that has analyst upside.

Data Centre growth remains stellar - i love the sovereignty defensive position where the AU superannuation fund co-shareholder gives both Govt and tier 1 Corporate a sense of trust and stops the likes of Microsoft / Amazon et al coming aggressively into this valuable niche. Or at least not easily… Despite the slight delay to EBITDA generation - they’ve flagged demand continues to surge - and they’re accelerating their capital deployment (Sydney investor presentation). Looks like there’s lots more headroom, and it remains one of the jewels in the IFT crown. The above forum commentary about a fully priced IFT asset - well let’s see where this sits in 2-3 years. And we’ll see how fully priced it is!

Vodafone exit - imo remains an interesting proposition - within the next 2 years? On the downside of interest rates - after they’ve extracted the best of the IT transformation and cost out - what a return! Basically paid for itself and they own half of it. This will be the most successful local utility ownership period on record!

The only fly in the ointment remains the health sector - but the factors are clearly beyond reasonable control and it looks to be very short term in impact. They have high conviction in the segment and I’m interested to see how the NZ Govt health funding changes play out to assist with more preventative treatments, surely this will be beneficial…

The airport as an odd part of the portfolio - maybe - but it’s a very stable cash generating unit that would normally (outside a pandemic) underwrite the small dividend yield model. Given so much of the portfolio is capital intensive - i’d be surprised to see them give it up and finding a local buyer, or one that would get OIO approval feels quite hard…. But who knows.

I didn’t listen to the interims, and normally can glean a little more intel during the oral presentation and the follow up presentations, so this is just from scanning the current online info.

You make some excellent points. Infratil goes from strength to strength and is a superbly managed company. Unfortunately (for them) a lot of people still don't get it and often begrudge Morrison & Co's well earned fees.

[BlackPeter]

You make some excellent points. Infratil goes from strength to strength and is a superbly managed company. Unfortunately (for them) a lot of people still don't get it and often begrudge Morrison & Co's well earned fees.

No worries, you only can win in the investment world if you see things others don't ... and any gentleman investor would only silently congratulate themselves for their sharp eyes instead of rubbing it into his fellow investors eyes that they didn't had the same divine inspiration.

There is however just a small step from a successful investor who had the luck or the genius to trust the Morrison's over the last six years or so (and lets face it - this is the only time which really distinguishes IFT from any other infrastructure investment fund) to somebody who is thanks to his winning streak so over confident that he looses the sight on warning signs. It sounds you are straddling the border line.

Just tell us - are you still monitoring your investment? What would be your exit criteria?

Remember - past performance is no guarantee for future performance ... and just relying in a name is typically futile. Sure - sustainable success is typically earned, but luck is always part of it as well. People are lucky until they aren't.

There was a time when the RYM and the A2M and the FPH's and the XRO's of the world couldn't do a wrong step ... until they stumbled. They all had some amazing years ... until they ended.

Just make sure you are close enough to the exit when this happens with IFT ... and hey, be nice to your fellow posters. You never know - their eyes might see something your conscience just wants to ignore (ownership bias).

Anyway - long might your lucky streak last ... though - are you sure the trend isn't already turning?

[LaserEyeKiwi]

Book Value is $7.93 a share so current share price not far away from that

If anything cheap as

Where are you getting this figure from in the report?

Results announcement states $4.18 NTA per share

[winner69]

Where are you getting this figure from in the report?

Results announcement states $4.18 NTA per share

Just took the Equity of 5,742m on Balance Sheet divided by number of shares

Lots of Goodwill etc on Balance Sheet

PS: Company structure and reporting is rather complicated though ….so who owns how much isn’t that straightforward and above quick calc might be wrong.

[LaserEyeKiwi]

Just took the Equity of 5,742m on Balance Sheet divided by number of shares

Lots of Goodwill etc on Balance Sheet

PS: Company structure and reporting is rather complicated though ….so who owns how much isn’t that straightforward and above quick calc might be wrong.

I just used the $4.18 NTA figure they quoted to the NZX in the results announcement:

http://nzx-prod-s7fsd7f98s.s3-websit...348/383374.pdf

Most of their assets they don’t own 100% of:

A2799975-A8E1-4E01-899C-441C9F652AB1.jpeg

However I did just see there is a huge difference between their “Book value” & “fair value” estimates:

See page 17:

http://nzx-prod-s7fsd7f98s.s3-websit...348/383370.pdf

2EE220DB-BD74-4E17-B85F-35A910AD5AA0.jpg

[BlackPeter]

Where are you getting this figure from in the report?

Results announcement states $4.18 NTA per share

You do realise that book value is equal to NTA plus intangibles?

I.e. they are not the same ...

[3141592]

Now listened to the interim presentation - just a few other insights to add to my earlier post…

Expect within the near future an announcement for a re-entry into AU for a renewables business. The ex-CEO of Tilt (Deion Campbell) is now part of Morrison & Co and it sounds like they’re leveraging his experience, expertise and relationship network to contemplate starting another early stage business. It’ll take a few years to build a head of steam, but it makes sense and will add to their global scale over time. It’ll be a nimble business capable of putting together multi-party complex offerings that’ll find a niche below the major operators.

Remain keen on the health diagnostic and expect further acquisitions in this space. Maybe from Europe (my inference at the end?) as i think they want their 24h tele-radiology business model developed.

CDC - reiterated that the CEO had recently discussed at the Sydney investor day that customer demand remained very very high and it was giving them the necessary confidence to continue to invest.

Global renewable platform and Longroad - they would place a focus in the future (I’d say within 6 months) on bringing the journey for Longroad to a $500m EBITDA business within 4/5 years to life… assuming that means giving greater clarity on projections and capital requirements. This should assist the analyst forecasts - as they’ve until recently placed little value on the whole renewable sector. It’s now clearly maturing and emerging as something they need to attribute a realistic value too. They also reiterated the Biden's recent passing of legislation was having an immediate impact on Longroad's velocity. Great news here. Galileo was also progressing well albeit a few years behind Longroad. Manawa had the greatest challenge, with some regulatory uncertainties adding to risk in its development pipeline. They’d take a global perspective in capital allocation and Manawa investment needed to stack up against other territories that had potentially less risk profile.

[kiora]

Thanks 314....
Good summation
+ Manawa executives recently toured IFT Australian assets to see what synergies there could be