Sharechat Logo

Daily ShareChat: Infratil

By Jenny Ruth

Wednesday 7th April 2010

Text too small?
 Jenny Ruth

Infratil and the New Zealand Superannuation Fund's have acquired a quality asset at an attractive price in paying $696.5 million for Shell's New Zealand downstream assets, says First NZ Capital analyst Rob Bode.

He estimates the price represents a multiple of 4.2 times the earnings before interest, tax, depreciation and amortisation (EBITDA) of the retail and distribution assets, adjusting for the average level of inventory and backing out the value of the 17.1% stake in New Zealand Refining at his firm's valuation of $3.40 a share.

"Given the low acquisition multiple, Shell NZ is anticipated to be immediately accretive to Infratil's earnings. We estimate Infratil's annual earnings should increase by at least $20 million a year," Bode says.

The Shell businesses also have opportunities for both adding value and extracting excess capital, he says. "Over a four-to-five-year period, we see potential for EBITDA to lift from around current levels of $140 million to around $200 million to $220 million. In addition, we see potential for perhaps $200 million to $250 million of surplus capital to be extracted," he says.

"We think this investment could deliver value (capital growth and dividend income) in excess of $500 million for the consortium over the next five years."


BROKER CALL: outperform.


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Infratil sells Manston Airport for 350,000 British pounds to Stagecoach co-founder
Scottish government plans to nationalise Infratil's unprofitable Glasgow Prestwick Airport
Infratil stock undervalued after Z selldown, Wellington Airport worth more, broker says
Infratil plans $65 mln share buy-back to plump up price, flags more dividend growth
Infratil's plans for Z proceeds - debt reduction, buyback, Aussie windfarms
Z listing ups value of Infratil’s remaining stake but reduces earnings
Infratil, NZ Super Fund stand to triple their money on Z Energy investment
Infratil seeks fourth annual increase in fee pool for board
Wellington Airport keeps 2013 returns within regulator's guidelines, engages with carriers over fees
Infratil FY net profit drops to $3.4 mln on UK writedowns, charges