IFT - Infratil

[allfromacell]

IFT's SP is up over 40% so far this calendar year..... so yes some profit taking.

Also if I recall correctly, the last big announcement re CDC hinted at another big contract by 26 May and there may be short term disappointment re that not being announced.....yet.

For long term holders, no worries. The FY27 projected 22% revenue increase looks good and likely understated.

Reading through the words of Jason he hinted strongly that the entire 1.6GW pipeline will be contracted and we'll soon be hearing about further acceleration or extending the pipeline for growth delivered early next decade.

I think some concerns of the market are a bit spooked by the scale of capex.

[Mos]

A bit to unpack in that update. Aggressive plan. Points that stood out to me...
- CDC (49.7% owned) EBITDAF forecast to increase from $A393m in FY26 to $A1b+ by FY28 and then $A2b based on current contracted demand when 1GW of capacity fully deployed. Current pipeline taking CDC to 2.9 GW suggests EBITDAF could grow to $A5.8b when current pipeline built out and operational. Wow and gulp!
- Longroad (42.5% owned) Opco EBITDAF forecast to increase from $US367m in FY26 to $US1b+ by FY29. Plus management commentary in the Q&A's on the new idea to use their energy builds to supply their own/partners data centres "We make $70,000 of EBITDA per megawatt roughly from a Long Road Energy project. That's pretty much what our averages say. You would be making more like $1 million of EBITDA on a data center if you added that to it. So, pretty interesting kind of step up in the NPV that's potentially available to Long Road or its partners. That's how we're thinking about it."
- Guidance proportionate capex of $NZ 3.8b to $4.4b in FY27 alone. Not sitting on their hands!
- Pretty much every asset they own part from CDC, Longroad, Gurin Project Vanda could be up for sale to fund energy & data centre growth and create a more focused narrative for capital markets. Good bye Wellington Airport, Contact, RHCNZ, and other smaller businesses that don't fit the narrative and/or aren't scalable to say $1b+ EBITDA in pretty short order?

I don't think we have ever seen something this ambitious from a NZ listed company. Will be an interesting and quite possibly very rewarding white knuckle ride over the next 5-10 years. Massive value creation or risky overreach? Personally, will continue to hold and buckle up for the ride.

 

[allfromacell]

There is execution risk and the investment profile is certainly more risky, but it's strongly mitigated by very long term contracts at both CDC and Longroad.

I feel a lot more comfortable knowing how much of Jason's Bs own money is invested. I'll be watching his disclosures carefully.

[LoungeLizard]

A bit to unpack in that update. Aggressive plan. Points that stood out to me...
- CDC (49.7% owned) EBITDAF forecast to increase from $A393m in FY26 to $A1b+ by FY28 and then $A2b based on current contracted demand when 1GW of capacity fully deployed. Current pipeline taking CDC to 2.9 GW suggests EBITDAF could grow to $A5.8b when current pipeline built out and operational. Wow and gulp!
- Longroad (42.5% owned) Opco EBITDAF forecast to increase from $US367m in FY26 to $US1b+ by FY29. Plus management commentary in the Q&A's on the new idea to use their energy builds to supply their own/partners data centres "We make $70,000 of EBITDA per megawatt roughly from a Long Road Energy project. That's pretty much what our averages say. You would be making more like $1 million of EBITDA on a data center if you added that to it. So, pretty interesting kind of step up in the NPV that's potentially available to Long Road or its partners. That's how we're thinking about it."
- Guidance proportionate capex of $NZ 3.8b to $4.4b in FY27 alone. Not sitting on their hands!
- Pretty much every asset they own part from CDC, Longroad, Gurin Project Vanda could be up for sale to fund energy & data centre growth and create a more focused narrative for capital markets. Good bye Wellington Airport, Contact, RHCNZ, and other smaller businesses that don't fit the narrative and/or aren't scalable to say $1b+ EBITDA in pretty short order?

I don't think we have ever seen something this ambitious from a NZ listed company. Will be an interesting and quite possibly very rewarding white knuckle ride over the next 5-10 years. Massive value creation or risky overreach? Personally, will continue to hold and buckle up for the ride.

 

Good summation there, Mos. The numbers are hard to get one's head around. Scary in terms of the level of investment required but then so are the returns - scary in a good way.
I go back a way with IFT and it has been my best, most consistent and now easily my biggest investment. Never thought about selling and have followed the tried and true "buy in the dips" method. Seems to work. Incredible that it was only $3.30 10 years ago!

[Left Field]

That capex of $NZ 3.8b to $4.4b in FY27 is mind bogling stuff......it does my head in trying to imagine what the resulting NTA figs and contracted revenue will mean in SP appreciation etc.

Like LL IFT is my biggest holding and I'm strapping in for the ride.

(Also v happy to see FPH doing so well today as well.)

[Mos]

Good points LL and LF. 9.3% of portfolio for me and generated strong returns over the past decade as you have experienced. will probably get to 20%+ of portfolio without me buying another share over the next 5 years if IFT gets anywhere close to achieving their growth plans and EBITDAF targets! Buckled up.

[HAWKDOG]

I see no reason to sell - I was only commenting as the bid was quite high pre market - but the bids must of all got pulled.

[Left Field]

Wow! Huge IFT month end sale going on at close today.

6.4 mill shares at VWAP around $15.71 when I looked.

This included 2 mill @ traded at $14.67 ! ( how does that even happen?? - index rebalancing related party sales??)

Anyway's onwards and upwards from $15.70 I suspect.

[Left Field]

Good to see the CFO buying up at current prices....

https://api.nzx.com/public/announcement/473730/attachment/469877/473730-469877.pdf

[LoungeLizard]

Good to see the CFO buying up at current prices....

https://api.nzx.com/public/announcement/473730/attachment/469877/473730-469877.pdf

Yep, bought another couple of thousand myself. Markets got a bit of jitters about the increase in capex. Not justified in my view, hence good buying at current price.

[Mos]

Good sign for Infratil per herald this morning...

Google chief executive Sundar Pichai told investors last month that the company is "compute-constrained in the near term", meaning it cannot build the necessary infrastructure fast enough to meet demand.

[Left Field]

I attended an IFT shareholders meeting today and was amazed to hear these details of Longroad's USA energy builds.

Importantly for IFT shareholders; These energy builds are already contracted (in order to gain USA Tax credits)  the land has been aquired, and either building has commenced or orders placed for the necessary equipment. In addition the resultant renewable energy is also already contracted out once production starts.

In short, Longroad have contracted USA renewable energy contracts for 13.7 GW of electricity by 2030......that's 2.5 GW more than the total electricity being produced in NZ currently.

To put this into context;

By 2027 Longroad will be producing more electricity than Mercury, Contact energy and Genesis combined.

By 2028 Longroad will be producing more electricity than Mercury, Contact energy, Genesis and Meridian combined.

By 2029 Lonroad will be producing 2.5 GW more electricity than the total currently being produced in NZ

By 2030 Longroad will be producing  a total of 13.7GW of renewable electricity.

IFT is not only an impressive data centre play, it is  also a huge renewable energy play.

[LoungeLizard]

I attended an IFT shareholders meeting today and was amazed to hear these details of Longroad's USA energy builds.

Importantly for IFT shareholders; These energy builds are already contracted (in order to gain USA Tax credits)  the land has been aquired, and either building has commenced or orders placed for the necessary equipment. In addition the resultant renewable energy is also already contracted out once production starts.

In short, Longroad have contracted USA renewable energy contracts for 13.7 GW of electricity by 2030......that's 2.5 GW more than the total electricity being produced in NZ currently.

To put this into context;

By 2027 Longroad will be producing more electricity than Mercury, Contact energy and Genesis combined.

By 2028 Longroad will be producing more electricity than Mercury, Contact energy, Genesis and Meridian combined.

By 2029 Lonroad will be producing 2.5 GW more electricity than the total currently being produced in NZ

By 2030 Longroad will be producing  a total of 13.7GW of renewable electricity.

IFT is not only an impressive data centre play, it is  also a huge renewable energy play.

Mind boggling numbers. Thanks for reporting back.

As you say, IFT may have committed the capex - which is huge in itself - but the expenditure is contractually covered before they start building. ie very little risk. US electricity demand for datacentres and domestic/industrial electrification is projected to increase by 30-50% by 2040. Big users are falling over themselves trying to nail down long term contracts. Longroads's EBITDAF was up 170% last year and the projections are for even bigger growth this year.
 
Surprised to see the SP down today, as it goes ex-dividend tomorrow. Strange beast that Mr Market!