IFT - Infratil

[LoungeLizard]

SUM PE 9.5 for FY25 and 8.5 for FY26  https://www.marketscreener.com/quote/stock/SUMMERSET-GROUP-HOLDINGS--10089438/
MFT 23 and 21 https://www.marketscreener.com/quote/stock/MAINFREIGHT-LIMITED-6492059/finances/

I was quite impressed with Matt Peek at last year's annual meeting.  Wish he had of followed through on my suggestion of buying TRA @ $4 at the time for his fund though, (up ~ 50% since then).  Fortunately, I have a truckload of TRA already so it doesn't really matter.

I hold KFL for the diversification it offers and sometimes like today, it trades on a pretty decent discount to NTA, with NTA up 7 cents in the last week but share price only up 2 cents.  Then there's the warrants which I often find attractive. 

IFT have been one of their most successful holdings over the years.  I have no idea which way from here for IFT but I do understand holders feeling encouraged seeing management write sizeable cheques to top up their holdings.

FPH PE:117
AIA PE:165

Many of our best companies trade on very high PE's and low yield. As for Apple, Tesla, Amazon etc, well don't get me started. It's all about prospects for growth. IFT have done phenomenally well in the past ten years, the odd blip notwithstanding. The management fees are an issue, but that aside their acquisitions and in some cases, sales, have yielded huge returns. Their move into renewables and data-centres has been prescient. There's a huge gain on sale in either area should they decide to divest and move into other areas. The recent divestment of Manawa tops up a considerable warchest. In other words, there's a good runway ahead for further expansion of the business.
 The Sp went backwards last year, due mainly to the Trump effect, but hopefully they'll get back to their 15% yearly SP growth. The SP is up about $1.50 from the start of the year, so the blip has been largely corrected. Onwards and upwards from here?

[Basil]

I prefer to look at forward PE's because the market is always forward looking.  Average analyst forecasts
AIA FY25 PE is 35.9 https://www.marketscreener.com/quote/stock/AUCKLAND-INTERNATIONAL-AI-16195084/finances/
and FPH 49.4 https://www.marketscreener.com/quote/stock/FISHER-PAYKEL-HEALTHCARE--6492630/
Very high metrics for those two, agreed. but not stratospheric.  Whether those metrics are warranted from the growth rate of each company ?, I am happy to leave to Matt Peek's judgement.
Agree on Tesla, it sometimes has many of the makings of a cult stock where zealots will claim fundamental's don't matter.
IFT up 27% from recent lows so anyone who had the courage to jump in back in the very low $9's has every right to feel pretty content with themselves but as to where too from here ? Honestly, I wouldn't have a clue.

[LoungeLizard]

In the current market - NZ and global - I think anyone could be forgiven for saying "I haven't got a clue."
 No company is immune to a general downturn or a left-field event. Diversification is, and always was, key. Either through funds - I hold a bit in all three Fisher funds - KFL, MLN and BRM - or through safe(ish) infrastructure / utility stocks, like IFT and Spark (ahem). I'm not so focussed on yield per se,  but also hold or have held TRA and HLG, which have done well even in difficult times. "Fun" stocks like Pacific Edge haven't been much fun of late, but I am keeping the faith (just).
 

[Basil]

Yeap, LL, its been a very tough start to 2025 for just about everyone I reckon.

[Left Field]

It is possible that perceptions of IFT's current P/E as 'excessive' are over-stated.

I expect that most investors buying IFT in recent times from $10 upwards (Including the CEO,) are expecting P/E figures to improve as perceptions of IFT shift from being an 'infrastructure' investment to more of a ' utilities/tech' investment.

P/E is a dark art and on a comparable P/E basis IFT is relatively unique, so I am making no projections.  However the following P/E comparisons (E&OE) are interesting and just maybe they indicate that IFT's current P/E is actually conservative???

IFT trading on a current P/E of 18.4
MSFT P/E 32.88
AMZN P/E 34.4 (arguably an on-line retailer - however, AWS (web services) account for 63% of AMZN's operating profits.)
FPH P/E 117.4
GTK P/E 128.9 (Was seen as utilities infrastructure but increasingly SAAS)


(Disc - hold IFT, GTK & FPH.)

[Left Field]

Some  points from IFT's May newsletter.

Macquarie Australia Conference

Infratil was pleased to participate in the Macquarie Australia Conference in Sydney last week - one of the largest institutional investor events in the Southern Hemisphere. Over two days, we met with more than 30 global and Australasian investors across one-on-one and group meetings and participated in a fireside chat presentation featuring CEO Jason Boyes and CDC CEO Greg Boorer to over 100 attendees.

   Key themes from the session were:
   
- In the one to two-year horizon, CDC's plan execution is central. CDC is expecting to double earnings over the next two years with ~80% (average) of forecast revenue growth already contracted, supporting progress towards Infratil's 11–15% 10-year TSR target.
   
- In the two to five-year horizon, Infratil's base of core cash-generating assets - including One NZ, Wellington Airport, and RHCNZ - are expected to deliver high single-digit returns in aggregate, helping fund reinvestment into high-growth platforms.

- Over the longer term, platforms like Gurīn Energy, Galileo, and Kao Data offer the potential to deliver returns above our target - particularly as AI, digital sovereignty, and the energy transition continue to gather momentum. Gurīn's receipt in September 2024 of a conditional licence from Singapore's Energy Market Authority for Project Vanda was highlighted as a key milestone.

[LoungeLizard]

Some  points from IFT's May newsletter.

Macquarie Australia Conference

Infratil was pleased to participate in the Macquarie Australia Conference in Sydney last week - one of the largest institutional investor events in the Southern Hemisphere. Over two days, we met with more than 30 global and Australasian investors across one-on-one and group meetings and participated in a fireside chat presentation featuring CEO Jason Boyes and CDC CEO Greg Boorer to over 100 attendees.

   Key themes from the session were:
   
- In the one to two-year horizon, CDC's plan execution is central. CDC is expecting to double earnings over the next two years with ~80% (average) of forecast revenue growth already contracted, supporting progress towards Infratil's 11–15% 10-year TSR target.
   
- In the two to five-year horizon, Infratil's base of core cash-generating assets - including One NZ, Wellington Airport, and RHCNZ - are expected to deliver high single-digit returns in aggregate, helping fund reinvestment into high-growth platforms.

- Over the longer term, platforms like Gurīn Energy, Galileo, and Kao Data offer the potential to deliver returns above our target - particularly as AI, digital sovereignty, and the energy transition continue to gather momentum. Gurīn's receipt in September 2024 of a conditional licence from Singapore's Energy Market Authority for Project Vanda was highlighted as a key milestone.

The CDC numbers are looking particularly good.
Cash generating assets also returning good numbers
$180m coming IFT's way from the Manawa divestment.

Back to sleep...

[Cod]

Round trip completed - Earnings report next event.
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