IFT - Infratil

[Red Baron]

Old news rehashed  as Amazon Web Services launches/opens its NZ Data centres.... no mention of IFT or CDC, no mention of locations.....however One NZ is detailed in the impressive client list!?

https://www.geekzone.co.nz/content.asp?contentid=27213

"....As part of its long-term commitment, Amazon is planning to invest more than NZ$7.5 billion in New Zealand to support the construction, connection, operation, and maintenance of its data centers in the country.
 
"The new AWS Region in New Zealand will help serve the growing demand for cloud services across the country and empower organizations of all sizes to accelerate their digital transformation," said Prasad Kalyanaraman, vice president of Infrastructure Services at AWS. "With this launch, businesses can now leverage advanced AWS technologies, from core cloud capabilities to artificial intelligence and machine learning, all while meeting local data residency requirements. By investing in New Zealand's digital infrastructure, we're proud to support the country's economic growth, foster innovation, and help position it as a technology hub in the Asia Pacific region."....

...Organisations in New Zealand that choose AWS to run their workloads include AMP New Zealand, AsureQuality, Contact Energy, Education Perfect, Foodstuffs South Island, Halter, Kiwibank, MATTR, Mercury NZ, Les Mills, Ministry of Transport, Mitre 10 New Zealand, New Zealand Post, One New Zealand, Sharesies, Steel & Tube Holdings, Toitū Te Whenua Land Information New Zealand, TradeMe, TVNZ, University of Auckland, Vector, Wellington City Council, Xero, and more...."

And MATTR eez a Zpark zubsidiary!

RB

[KW]

Old news rehashed  as Amazon Web Services launches/opens its NZ Data centres.... no mention of IFT or CDC, no mention of locations.....however One NZ is detailed in the impressive client list!?

Kind of.  They announced it back in 2020 then quietly canned it when they found out how expensive everything in NZ is.  Either that, or Labour losing the election meant that their secret tax breaks disappeared as well. 

Now that its been resurrected, the real question is what did Luxon have to promise, and how much will taxpayers be contributing, in order for Amazon to agree to greenlight the project again.  They usually dont do anything, anywhere, unless promised big Govt subsidies or tax breaks. 

Examples:
https://www.spotlightpa.org/news/2025/06/amazon-data-centers-pennsylvania-tax-break-energy-grid/
https://goodjobsfirst.org/at-1-billion-amazons-oregon-subsidy-is-largest-known-in-history/
https://www.uni-europa.org/news/amazons-hidden-subsidies/
https://ncrp.org/resources/what-does-amazons-hq2-tax-break-grab-mean-for-u-s-cities/

Then the bigger question for IFT shareholders - how does IFT compete against a corporate behemoth that operates not just tax free, but govt subsidised?

[Left Field]

Then the bigger question for IFT shareholders - how does IFT compete against a corporate behemoth that operates not just tax free, but govt subsidised?

Yes Amazon has the clout to secure horrendous advantages that threaten competitors, however...not all Governments (and not all companies) want to hand their data over to AWS or create a monopoly.

Think sovereignty and data security.

Think energy and  IFT's Longroad, Gurin etc (nicely positioned in the renewable energy sector)

And then again, think AWS probably already an IFT/CDC customer/partner .

[Mos]

Per this Newsroom article - seems like AWS NZ data centres are vapourware and PR fluff, with AWS just using CDC data centres here. Shout out to Allfromacell on the other channel for sharing this. Corporate comedy gold and good business for CDC.

https://newsroom.co.nz/2025/09/02/amazon-aborts-construction-of-west-auckland-data-centre/

[Left Field]

NBR reports that wealth management firm CITI has opened coverage of IFT with a BUY rating and target SP of $14.10c

Seems Citi  is impressed by IFT's Longroad and CDC prospects.

IFT shares up 2.6% today to $12.40

ps TA  encouraging more upside.

[Left Field]

Larry Ellison overtakes Elon Musk as worlds richest man on the back of data centre and cloud computing strengths......

https://www.theguardian.com/technology/2025/sep/10/larry-ellison-dislodges-elon-musk-as-worlds-richest-person

"Oracle accounts for the majority of Ellison's wealth and its value has been boosted by demand from AI companies for its cloud services, which provide computing capacity for firms such as ChatGPT developer OpenAI, who need vast datacentres to power their technology."

IFT holders waiting patiently....

[Left Field]

 IFT just released attached presentation materials being used for a North American renewables valuation workshop with analysts this afternoon.

https://api.nzx.com/public/announcement/458973/attachment/452338/458973-452338.pdf

Impressive forward projections for Longroad. Enjoy.

[Left Field]

Some good discussion of the North American analysts material (see post #426) on the other channel which I won't repeat.

Some added thoughts & questions;

1.) Note the figures presented are  in $USD
2.) Why was this material prepared for Nth American analysts?
3.) If IFT/Longroad is able to pay out only $US 150m of capital per year to get $US 2,000m of capex what would the current market value be for Longroad?
4.) Does it make sense for IFT to sell (say) 40% of Longroad?
5.) If IFT sells (say) 40% of Longroad what value would this return do to the value of IFT whose current Market Cap is approximately  $NZ 12.2 Billion ?

Lots of Q's.... no answers.....the market will have its say.......interesting times ahead.

[Left Field]

More from IFT..... keeping us busy with this update from today's Sydney based investors briefing.

https://www.nzx.com/announcements/458998

"Our recent inclusion in the S&P/ASX 200 index has helped lift Australian ownership over 10%, but that's still well below the 40% or so of our asset portfolio that is invested here in Australia," she said.
 
 Infratil CEO Jason Boyes said the company is prioritising further investment in the fast-growing digital and renewable energy sectors and simplifying its current portfolio.
 
 "Our target is to achieve between 11 to 15 per cent returns over a rolling 10-year period and today we're showcasing some of the exciting growth opportunities we see from our global portfolio after navigating a volatile nine months," he said.
 
 Four of Infratil's portfolio companies are providing updates on their operations. Australasian data centre operator CDC remains on track to double FY25 earnings by FY27, with contracting progressing well, and expected to be completed in the near term. Longroad Energy has clarity on tax credit qualification for its future projects and announced a new solar project earlier this week to deliver renewable energy for Meta in Texas. Gurīn Energy has its first solar site operational in the Philippines and is progressing plans to deliver renewable energy from Indonesia to Singapore. One NZ has maintained steady performance despite the wider challenges of the New Zealand economy and is investing for operational efficiency.
 
 Infratil has also announced a strategic review of Australian medical imaging business Qscan. Infratil's 57% shareholding in Qscan was last valued at NZ$460 million. This follows an announcement in August of the sale of its 50% stake in RetireAustralia for NZ$328 million, with the transaction expected to be completed by the end of the calendar year. Infratil is targeting NZ$1 billion of divestment proceeds from the simplification of its investment portfolio."

[Left Field]

News out today.....

"CDC has today confirmed it has secured approximately 100MW of new contracted capacity.
 
 Infratil CEO Jason Boyes said the announcement underscores strong ongoing demand in the Australasian data centre market.
 
 "As highlighted at Infratil's Investor Day last week, CDC continues to lead the market with its ability to deliver large-scale data centre footprints tailored to growing customer demand driven by cloud and AI workloads.
 
 "This announcement provides high visibility that CDC remains on track to double FY25 earnings by FY27. With other contracts signed since May, approximately 95% of forecast lease revenues are now under contract, and we remain confident in contracting the remaining capacity.
 
 "These contracts demonstrate CDC's ability to attract significant capacity demand due to its technological advantage and unrivalled track record of delivering future-proof campuses for the AI world."

[Left Field]

$32 mill CDC valuation bonus for IFT......plus market still to catch up on US overnight news re  AMI Chip supply deal with Open AI.

https://www.nzx.com/announcements/460162

The 30 September 2025 independent valuation of CDC shows an increase of A$77 million since 30 June 2025, to A$13.6 billion, reflecting the mid-point of the assessed valuation range of A$12.8 billion to A$14.5 billion. On this basis, Infratil's 49.72% interest in CDC is valued at A$6,780 million, up A$32 million from A$6,748 million at 30 June 2025.

https://www.reuters.com/business/amd-signs-ai-chip-supply-deal-with-openai-gives-it-option-take-10-stake-2025-10-06/

[Left Field]

New deal for CDC which includes Nvidia as a client. Details TBA with half year results in Nov.

Not marked as price sensitive at this stage.

https://www.nzx.com/announcements/460798

[allfromacell]

Good stuff, does anyone know what the bottleneck is for CDC to get even more aggressive with growth and build even more DCs then they already have planned? Maybe it's power?

The compute scaling laws of AI essentially guarantee the demand is not gong away, in fact it's going to grow by many orders of magnitude. It's hard for some to accept but the simple reality is the more compute you throw at AI models the more intelligent they become.

The question is who benefits the most as we build out the infrastructure to convert terrawats of electricity into compute, right now nvida is collecting the majority of the margins, hundreds of billions cash flows this year alone?

Is capital better put there as this spend goes up by 10x or 100x etc?

I see CDC as a risk adverse way to gain exposure to this AI infrastructure spend but in terms of one's overall exposure to AI, there are surely much more aggressive ways to capture the huge upside.

What a time to be alive.

[Waltzing]

CDC DATA CENTRES - INFRATIL INVESTMENT ANALYSIS
NZX: IFT | CDC Valuation Update - 30 September 2025

VALUATION SUMMARY
Infratil's 49.72% Interest in CDC:

Current Value: A$6,780 million (up A$32M from June 2025)
Total CDC Value: A$13.6 billion (valuation range: A$12.8B - A$14.5B)
Quarterly Increase: A$77 million (+0.57%)
Net Debt: A$4,431 million (up from A$4,070M June 2025)

Key Operational Metrics:

Operating Capacity: 372MW (unchanged)
Under Construction: 453MW (unchanged)
Future Build Pipeline to FY34: 1,636MW
Total Pipeline: 2,461MW
New Contracted Capacity: ~100MW secured in Q3 2025

Valuation Drivers - Q3 2025:

Cost of Equity: 11.38% (up from 11.05% in June)
Asset Specific Risk Premium (ASRP): Reduced (reflecting de-risking)
Forecast Gearing Ratio: Increased (valuer methodology change, not structural)
Build Programme: Consistent through FY34
Committed Capital: A$250M additional within 6 months

Positive Developments:

Perth, Western Australia expansion announced
100MW new contracted capacity secured
Strong demand across Australasia confirmed
Valuer reduced ASRP due to execution progress


GLOBAL RISK ASSESSMENT - DATA CENTRES 2025-2026
CRITICAL RISK #1: Climate & Physical Infrastructure
Climate Hazard Exposure:

APAC Region: >10% of data centres at HIGH RISK in 2025 (rising to >12% by 2050)
Major hubs (Tokyo, Hong Kong, Shanghai, Bangkok) face 20-64% high-risk facilities by 2050
Eight climate hazards tracked: flooding, cyclones, fires, coastal inundation, extreme wind, freeze-thaw, soil movement
Insurance costs projected to triple/quadruple by 2050 without adaptation

CDC Geographic Exposure:

Canberra: 117MW operating, 58MW under construction, 73MW future (248MW total)
Sydney: 123MW operating, 168MW under construction, 878MW future (1,169MW total)
Melbourne: 34MW operating, 226MW under construction, 525MW future (785MW total)
Auckland: 98MW operating, 0MW under construction, 126MW future (224MW total)
Australian Expansion: 34MW future

Risk Mitigation Assessment:

Australia/NZ generally lower climate risk vs Asia/US hotspots
Sydney expansion (largest pipeline) requires climate adaptation planning
Perth expansion brings new geographic risk profile (need assessment)
Adaptation measures can reduce climate risk by 72% (per XDI report)

Financial Impact:

Insurance premium increases likely 2026-2030
Capex requirements for climate adaptation not disclosed
Physical damage risk relatively contained vs global peers


CRITICAL RISK #2: Energy Infrastructure & Power Availability
Global Power Crisis:

US data centre power demand: 35GW (2025) → 78GW (2035)
Power transmission delays: 4+ years in many regions
Northern Virginia: New connections paused until 2026 due to grid instability
AI workloads driving 3x increase in energy demand

Australian/NZ Power Market:

Australia: Renewable energy transition underway but capacity constrained
Electricity prices volatile in Australia (Q3 2025)
Power Purchase Agreements (PPAs) critical for new capacity
Government support for data centre development

CDC Exposure:

1,636MW future build requires securing ~1.6GW of power capacity
A$250M committed capital likely includes power infrastructure
Valuation assumes build to 2040, but power availability is constraint
Perth expansion: Western Australia power grid capacity TBD

Risk Assessment:

MODERATE - Australasian power markets less stressed than US
Power costs rising = potential margin pressure
Timing risk: Development delays if power unavailable


CRITICAL RISK #3: AI Disruption & Demand Volatility
DeepSeek Moment (January 2025):

Chinese AI startup achieved similar LLM results with 90% less compute power
Challenged assumption: "Bigger AI = More Computing Power"
Market impact: Tech valuations dropped, data centre expansion assumptions questioned
Key question: Is data centre capacity expansion sustainable if AI becomes more efficient?

AI Data Centre Economics:

AI rack density: 40kW → 130kW (2025) → 250kW (2030 projection)
AI data centres generate $12.50/watt revenue vs $4.20/watt traditional
33% of global data centre capacity dedicated to AI by 2025
AI cooling requirements: Liquid cooling replacing air systems

CDC Position:

CDC serves hyperscale customers (cloud, AI workloads)
100MW new contracts in Q3 2025 suggest demand remains strong
Risk: If AI compute efficiency improves faster than expected, demand growth slows
Opportunity: AI-optimized facilities command premium pricing

Risk Assessment:

MODERATE-HIGH - Technology disruption risk is real but timeline uncertain
CDC's contracted capacity (100MW) provides near-term revenue visibility
Future build pipeline (1,636MW) faces demand uncertainty post-2027


CRITICAL RISK #4: Cost of Capital & Valuation Methodology
Valuation Changes - New Valuer (Sept 2025):

Cost of Equity: 11.05% → 11.38% (+0.33%)
Gearing Ratio: Increased (methodology change)
ASRP: Reduced (de-risking operational sites)
Net Impact: +A$77M valuation increase (modest)

Financial Structure:

Net Debt: A$4,431M (up A$361M from June)
Debt/Equity: Rising gearing ratio
Terminal Year: 2055 (assumes 30+ year operations)
Capex: A$250M committed near-term, A$billions required for full pipeline

Interest Rate Environment (Oct 2025):

Risk-free rate: 4.00% (stable)
Asset beta: 0.575 (unchanged)
Global interest rates: Declining in NZ/Australia (supportive)

Valuation Sensitivity:

0.33% cost of equity increase = material valuation impact
Future valuations dependent on execution, not just market conditions
Net debt rising faster than equity value (leverage increasing)

Risk Assessment:

MODERATE - Cost of capital stable but valuation sensitive to execution
Infratil must commit A$250M+ within 6 months (dilution or debt?)
Valuation range (A$12.8B - A$14.5B) = +/- 6.25% uncertainty


CRITICAL RISK #5: Regulatory & Cybersecurity
Global Regulatory Trends 2025-2026:

EU NIS2: Cybersecurity standards effective January 2025
EU DORA: Financial sector resilience requirements (2025)
Singapore: Digital Infrastructure Act under development
Sustainability Reporting: EU CSRD (2025), Asia phasing in (2026-2028)
PUE Requirements: Australia targeting 1.3 or lower (2025 standards)

CDC Exposure:

Operates in multiple jurisdictions (Australia, NZ, future Perth)
Banking/financial services clients = heightened cybersecurity requirements
Sustainability reporting requirements coming (2026-2027 likely)
No disclosed cybersecurity incidents (positive)

Compliance Costs:

Cybersecurity infrastructure investment required
Sustainability reporting = operational overhead
PUE compliance may require cooling technology upgrades
Perth expansion must meet Western Australia regulations

Risk Assessment:

LOW-MODERATE - Regulatory risk is manageable but adds cost
Infratil/CDC experienced in regulatory compliance
Early adoption of standards = competitive advantage


CRITICAL RISK #6: Execution & Development Pipeline
Development Pipeline Complexity:

453MW under construction (2025-2026 completion expected)
1,636MW future build (2027-2034)
Total capex: A$10B+ estimated (not disclosed)
100MW contracted but not yet built

Execution Risks:

Construction cost inflation (2024-2025 high)
Labor shortages in Australian construction market
Supply chain delays (cooling equipment, generators, electrical)
Permitting delays (environmental, power grid connection)

Historical Performance:

June → Sept: No capacity additions despite A$361M debt increase
453MW under construction unchanged (completion timeline TBD)
Future build increased modestly (1,629MW → 1,636MW)

Risk Assessment:

MODERATE-HIGH - Execution risk is material given pipeline size
A$250M committed capital is small relative to total build programme
Timeline slippage would delay revenue, increase costs
Valuation assumes completion to 2040 (15-year execution period)


GLOBAL EVENTS - RISK FACTORS (2025-2026)
Geopolitical:

US-China tech decoupling continues (semiconductor, AI restrictions)
Outbound Investment Security Program (US) regulates investment in AI/quantum sectors
China economic weakness (impacts demand from Chinese tech companies)
Trade tensions = potential supply chain disruptions

Economic:

Australia economic slowdown (2025) = enterprise spending caution
NZ domestic recession (consumer) but export sector strong
Interest rates declining (supportive for infrastructure)
Commodity prices volatile (construction materials)

Technology:

AI efficiency gains (DeepSeek impact) = demand uncertainty
Liquid cooling technology transition = capex requirement
Quantum computing development = potential disruption (2028+)
Edge computing vs centralized data centres (competitive dynamic)

Environmental:

Water stress: APAC region faces high water stress by 2030 (52% of hubs)
Carbon emissions: Data centres = 3.4% of global CO2 (2025)
Renewable energy requirements = PPA costs rising
Heat management: Cooling Degree Days +83% average (2030-2080)


INVESTMENT THESIS - CDC/INFRATIL
Bull Case:

Strong contracted demand (100MW Q3 2025)
Australasian market less saturated than US
Infratil experienced infrastructure investor
AI/cloud migration secular growth trend
Lower climate risk vs Asia/US peers
Valuation increased despite conservative cost of equity rise

Bear Case:

AI compute efficiency gains (DeepSeek) threaten demand assumptions
Execution risk on 1,636MW future build pipeline
Rising net debt (A$4.4B) with ongoing capital requirements
Climate adaptation capex not disclosed
Power infrastructure constraints could delay build
Valuation sensitive to cost of capital changes

Base Case Assessment:

CDC remains strategic asset for Infratil
Near-term (2025-2027): Strong demand, execution risk
Medium-term (2027-2030): Demand visibility improves as AI workloads mature
Long-term (2030+): Climate adaptation, technology disruption risks rise


KEY MONITORING METRICS - QUARTERLY
Operational:

MW capacity additions (operating, under construction, future)
Contracted capacity vs pipeline (100MW contracted in Q3 = benchmark)
Utilization rates (not disclosed - request transparency)
Customer concentration (hyperscale vs enterprise mix)

Financial:

Valuation changes (cost of equity, ASRP, gearing)
Net debt growth vs equity value growth
Capital commitments (A$250M within 6 months is first tranche)
Revenue per MW (pricing power indicator)

External Factors:

Australian/NZ power market capacity and pricing
Climate events impacting Australasian operations
AI compute efficiency trends (follow DeepSeek developments)
Regulatory changes (PUE standards, cybersecurity, sustainability)

Geographic Expansion:

Perth project milestones (power agreements, permits, construction start)
New region announcements (CDC expanding beyond current footprint?)


RECOMMENDATION
CDC/Infratil Position: HOLD - MONITOR CLOSELY
Rationale:

Valuation increase modest (+0.57%) despite strong demand narrative
Net debt rising faster than equity value = leverage concern
Execution risk on 1,636MW pipeline material and underappreciated
Global data centre risks (climate, energy, AI disruption) increasing 2025-2026
Infratil's 49.72% stake valued at A$6.78B (~NZ$7.46B at 1.10 FX rate)

Risk-Adjusted Fair Value:

Current: A$6,780M (Infratil share)
Bull Case (execution success, AI demand sustained): A$7,500M+ by 2027
Bear Case (delays, demand slowdown, climate costs): A$6,000M by 2027

Action Items for Infratil Shareholders:

Request transparency on utilization rates and revenue per MW
Monitor A$250M capital commitment timing and terms (debt vs equity)
Track Perth expansion progress (power agreements critical)
Watch for climate adaptation capex disclosures
Assess impact of AI compute efficiency on demand forecasts


Analysis Date: October 16, 2025
Next Valuation: December 2025 (Q4 2025 expected)
Key Risks: Execution, AI Disruption, Climate, Power Infrastructure
Opportunity: Australasian data centre market growth, lower climate risk vs global peers