Morningstar | One Off Boosts Infratil's FY19 Guidance, No Change to FVE
Narrow-moat-rated Infratil upped fiscal 2019 EBITDA guidance by NZD 40 million to a range of between NZD 540 million and NZD 580 million. The upgrade mainly relates to Longroad's sale of the Phoebe solar generation project in Texas, where a gain on sale was recorded. We upgrade our fiscal 2019 EBITDA forecast to the middle of guidance, while longer-term forecasts are largely unchanged. We maintain our NZD 3.10 fair value estimate and, at current prices, the stock trades 15% above our valuation.The acquisition of Tilt Renewables hasn't gone as smoothly as expected, with independent directors knocking back Infratil's NZD 2.30 offer as inadequate. Tilt's independent advisor Northington Partners valued the firm at NZD 2.56 to NZD 3.01 per share. In response, Infratil paid for its own independent advisor, Grant Thornton, which arrived at a much lower valuation of between NZD 1.87 and NZD 2.46 per share. Given Tilt's share price was as low as NZD 1.80 earlier this year before takeover activity began, perhaps Infratil's offer will succeed without support from independent directors.
Infratil and its subsidiaries own and operate infrastructure and utility businesses and investments in New Zealand and Australia. Co. and its subsidiaries operate in six business segments: TrustPower, Wellington Airport, NZ Bus, Infratil Energy Australia, Infratil Airports Europe and Other. Trust Power is Co.'s renewable generation investment; Wellington International Airport is Co.'s Wellington Airport Investment; NZ Bus is Co.'s transportation investment; and Infratil Energy Australia (including Perth Energy) is Co.'s non renewable generation investment. The principal investments in the Other segment are Co.'s interests in Z Energy, Metlifecare, RetireAustralia and ASIP.
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