Calculating Operatonal CDC NPAT: Attempt 1
Quote:
Originally Posted by
3141592
IMHO IFT remains the best placed risk adjusted public investment on NZX by a long shot. So many tail winds are in evidence, but particularly the AI growth into datacentre deployment, into data infrastructure growth and finally into green renewable energy demand. IFT sits across so many strong thematics / tail winds / growth areas. Beautifully positioned / poised!
Rate of increase in datacentre deployment in both CDC and KAO (not material in KAO but maturing nicely and is only a couple of years off of being very meaningful) is astonishing.
In active construction they appear to have more than 140% of existing capacity - that's not a pipeline, that's in active construction. The pipeline of owned sites plus the active construction is 350% increase against the existing deployed operational asset.
Assumption: I am assuming that because Infratil's investment in CDC is below 50%, CDC is not consolidated in the Infratil accounts.
I am framing my 'title question' from the point of view of new shareholders buying into IFT at 'book value' on the FY2024 balance date.
a/ Net Profit as Reported
From AR2024 p80, that is showing that the carrying value of CDC on the Infratil books is $1,403.4m.
The IFT Group share of NPAT, given IFT owns 48.24% of CDC, is 0.4824 x $201.9m= $97.40m
This means Infratil's investment in CDC is being carried on the books at a PE Ratio of $1,403.4/$97.40m = 14.4
Or looking at it another way, an earnings yield of $97.4m / $1,403.4 = 6.9%. (because Australian franking credits are not recognised in NZ, I guess this means that 6.9% is the 'gross earnings yield')
Given the touted growth prospects for CDC, both the PER and yield, as implied by book value, seem very reasonable.
b/ Net Profit as calculated
Muddying the water is slide 27 of the recent Infratil presentation.
https://infratil.com/news/infratil-a...-equity-raise/
In that, the bar graph shows EDITDAF for CDC over FY2024 of $271m, of which I presume the Infratil share is 0.4824x$271m = $130.7m
Total IFT balance sheet assets for FY2024 sum to $16,109.9m. So in a 'total asset picture', the IFT stake in CDC represents only: $1,403.4m/$16.109.9m= 8.71% of all assets. The net financing expense over the FY2024 year was $366.7m. 8.71% of that figure is $31.9m. So I take $31.9m as 'allocated net interest' that must be offset against against any profit from holding CDC.
i/ We make an assessment that the depreciation and amortisation of CDC assets is systematically charged over 20 years (buildings will probably be more and computer equipment less) .
ii/ We guess that the CDC assets in operation today earn 10% on the original capital outlay. This means the price of assets on the books is $97.4m/0.1= $974m.
Now, 1/20th of that figure is $48.7m. Assuming 'F' (which is generally reserved for one off non-operational transactions), is zero, we can calculate the implied IFT share of NPAT from the EBITDAF figure quoted as follows:
0.7 x ($130.7m - $31.9m - $48.7m) = $35.1m
Comparison Conclusion
$35.1m is well below the $97.4m of NPAT implied in AR2024 on page 80. This could mean a couple of things.
i/ My estimates for 'I' and 'DA' are wrong - could be, I invite readers to comment on my assumptions OR
ii/ there is a large one off gain F which has increased the CDC profit over FY2024 (AR2024 page 80).
The term EBITDAF does not appear once in AR2024. So I am finding it very difficult to see what is going on here, and whether that $97.4m IFT share of CDC profits has been inflated by one offs. I do find it difficult to assess results when the same company publishes annual results using different yardsticks, for -in this case- CDC. Inconsistent reporting just leaves me the impression that the company that is issuing the results has something to hide. I am in the dark as to whether that $97.4m implied profit share from CDC to Infratil for FY2024 is to any extent sustainable or not.
SNOOPY