Daily ShareChat: Infratil

By 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.

Daily ShareChat articles report how the main experts in the market might view a certain share and we provide this commentary as a useful resource for investors. Content on this site does not in any way constitute a recommendation to buy, hold or sell any particular share. Investors should always seek professional advice before making any investment decisions.

Comments from our readers

No comments yet

Add your comment:

Your name:
Your email:	Not displayed to the public
Comment:
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.

Anti-spam verification:

Type the text you see in the image into the field below. You are asked to do this in order to verify that this enquiry is not being performed by an automated process.

Printable version

Related News

Infratil reports drop in first half profit, on track for year
Infratil to boost capex at Wellington Airport for peak-time capacity
Utilico sells down stake in Infratil
Daily ShareChat: Infratil
Daily ShareChat: Infratil
Infratil highlights its success with Trustpower
Daily ShareChat: Infratil
Infratil gains confidence on earnings outlook
Morrison looking at Port of Brisbane lease
Infratil's Snapper may get surge in sales as gap widens with cash fares

Get quotes for Infratil Limited Ordinary Shares (IFT)

NZX Annoucements for IFT