https://www.marketscreener.com/quote...2600/finances/
Is Spark a dividend trap?
Earnings are forecast to grow at 3.5%?
Net margin forecast to be flat?
EBITAI forecast lowered 2025,2026 ?
Printable View
https://www.marketscreener.com/quote...2600/finances/
Is Spark a dividend trap?
Earnings are forecast to grow at 3.5%?
Net margin forecast to be flat?
EBITAI forecast lowered 2025,2026 ?
X roads & troubled? No
Dynamic? yes
When IFT have been growing organically for 30 years.They do their research,they take out long term contracts,they use the margin between long term contracts and funding to increase the returns for shareholders
( including Sovereign Wealth Funds)
Hmm doubt that its troubled water myself.Attachment 15170
Is Spark & CDC data centers competing against each other?
I somehow doubt it
Answer transferred to the SPK thread
https://www.sharetrader.co.nz/showth...=1#post1058907
SNOOPY
CDC have most of their datacentre investments in Australia, which are off the radar for Spark. But in Auckland CDC and Spark are looking like they are building very similar capacity data centre portfolios. Why wouldn't CDC and Spark be touting for the same customers in Auckland?
SNOOPY
While it is obvious that Infratil has a lot more capital available to splash on new projects than Spark, I push back against your claim that Spark is 'capital restricted'. From the Spark May 2024 profit downgrade:
"There is no change to FY24 capital expenditure and dividend guidance."
That doesn't sound like a company that is 'capital restricted' to me. And if Spark were really capital restricted, why have they spent so much on share buybacks during the year?
SNOOPY
Good to see more grid-scale battery investment, this from Contact https://www.nzx.com/announcements/433677
What happens when all the new shares hit the market? Theres currently around a dollar instant profit to be made, does anyone think there will be a sell down soon after? Personally I am surprised at the premium on market available right now.
We know that Infratil own a 48.24% stake of CDC. But this time, rather than create possible extra confusion by trying to adjust for the Infratil share all the way through (looking back over my previous 5 attempts I even managed to confuse myself, although I believe these errors are now corrected) I will use the raw CDC numbers and make any Infratil ownership share adjustments right at the end.
I have been criticised for not taking into account 'capitalisation of interest' in my net profit calculation. If interest is capitalised, it no longer becomes an expense. So this means the profit figures are higher than the numbers I have been touting. For those doubters out there I have decided to make the adjustment. So how do I make this change?
Interest Calculation
Starting from the Infratil capital raising presentation:
https://infratil.com/news/infratil-a...-equity-raise/
Slide 14 shows a key CDC metric is 7-10 times leverage. I will use the larger number (10), because that will give me the largest interest capitalisation effect. A leverage ratio of 10 means $10m of debt for every $1m of equity is CDC's preferred 'funding balance'.
If we look at the limited CDC balance sheet information we are given (AR2024 p80) total assets rose from $5,872.4m (EOFY2023) to $6,820.7m (EOFY2024), which is a rise of $948.3m. Let's assume that all of that increment represents new data centre builds completed over FY2024. Now, new assets are funded by a combination of debt and equity. With a 10:1 leverage ratio, we are looking at 'new project funding units' of $948.3m/11= $86.2m. In this instance this means $86.2m of equity funding, with the balance $948.3m-$86.2m = $857.1m funded by debt. Interest which is associated with this $857.1m in debt funding is interest that becomes capitalised.
As before, I assume total debt, across the year had a representative value of $4,251.1m. Let's say that USPP funding and other bank funding was secured at a rate of 3% (a pure guess on my part). That means the annual interest charge for CDC would be: 0.03 x $A4,251.1m = $127.5m. However, this calculation does not take into account the proportion of interest that was capitalised. The amount of interest capitalised represents $857.1m/$4,251.1m = 20.2% of the outstanding debt. 20.2% of the representative interest bill is: 0.202 x $127.5m = $25.7m. So $25.7m is the amount of the pool of net interest that I would expect to be capitalised, following on from all of my assumptions.
Depreciation and Amortisation calculation
My average modelled depreciation time remains at 40 years. The buildings may be on the books with a longer life than that, perhaps 50 years. But all of the cooling equipment will depreciate much faster than 40 years. So 40 years is my compromise 'combined total depreciation schedule number'. Amortisation is assumed to be zero over the period, as no goodwill would have been booked on the balance sheet for a 'green field build' data centre. AR2024 p80, that is showing that the carrying value of CDC on the Infratil books at the start of the financial year was $1,403.4m. That means we can estimate our annual CDC depreciation charge as 1/40 th of this number. $1.403.4m/40 = $35.1m. But the equivalent depreciation figure for the whole CDC company is: $35.1m/0.4823=$72.8m
iif/ Recalculating Net CDC Profit after once again revising interest charges
According to 'forest' who attended the presentation CDC presently earn between 10-15% on its different assets. So I will 'plumb down the middle' and take my asset return percentage being 12.5% as my estimate. I therefore estimate the income generating ability of those CDC assets on the books at EOFY2024, which I will call EBITDAF, to be: 0.125 x $1,403.4m = $175m. However, it seems that in reality the EBITDAF earning ability of CDC was a little above this lofty goal, coming in at $271m (although this is admittedly a definitively before tax figure. It could be that the return touted by 'forest' is $175m NPAT).
This means I now have two operational NPAT figures for CDC over FY2024 to present:
Using NPAT = 0.7 (EBITDAF - I - DA); (assuming the Australian corporate tax rate of 30%)
For no capitalisation of interest charges, I get:
'Operational NPAT' = 0.7 ( $271m - $127.5m - $72.8m ) = $49.5m, of which the IFT share is 0.4824 x $49.5m = $23.9m
For capitalisation of interest allowed, I get:
'Operational NPAT' = 0.7 ( $271m - ($127.5m - $25.7m) - $72.8m ) = $67.5m, of which the IFT share is 0.4824 x $67.5m = $32.6m
I am not guaranteeing that I have got my operational profit calculation right. But even with some more imagined future tweaks, I see no way to turn a $32.6m profit into a (0.4824x$201.9m=)$97.4m profit (the NPAT declared in AR2024 p80).
(The actual operational NPAT is adjustable and determinable by the gearing of CDC, which will have been decided upon by Infratil and its ownership partners. It could easily become more profitable by having less debt in its underlying structure. But to avoid paying back some of Infratil's injected capital as a 'tax bill', Infratil have kept the interest bill high. This is what accountants call 'tax efficiency'.)
SNOOPY
I think Snoopy's basic analysis is correct. Infratil have wandered into bubble prone areas of the market for the majority of its assets that are different from their historical investments and which they are poorly positioned to forecast and understand from Wellington.
Both the data centre and renewable energy boom in the US/Europe/Asia/Australasia to support them are not supported by fundamentals. Government subsidies and big tech's desire to appear green have formed the basis for IFT's lucrative offloading of renewable assets via Long Road et al. This could sharply reverse with an election in November or any number of other ways. Just to pick two possible, the recently passed nuclear legislation or Russia's defeat in their invasion of Ukraine leads to regime change and a flood of cheap energy.
Ultimately it is AI, Crypto and Cloud that have mostly driven the boom in data centre usage. Neither of the first two yet have many profitable business uses sufficient to justify the large processing costs involved. Their capital investment in processing power is driven by free flowing VC money. Both are also highly likely to suffer from legal and regulatory action. Which is to say both are in clearly in a bubble. Infrastructure companies should not invest in bubbles.
Cloud has been very successful but it is increasingly expensive. IT goes in cycle between client/server and I wouldn't be surprised if the next one is away from massive server usage to save on these costs. One long term rule is always bet on software, not hardware which Infratil is essentially doing. Hardware improvements are normally incremental where software improvements often are orders of magnitude.
As an investor you should at least acknowledge that Infratil is now much higher risk and this is driven by the clear incentives to take larger risks to increase the market capitalisation and fees to the manager and management.
Morrison describes itself as a global firm. They have offices in NZ, Australia, New York, Singapore and UK. If you have a look at their team you have a pretty experienced bunch of folks, former Brookfield staff etc. it would be interesting to know how many people are NZ based these days, I think both CEOs of IFT and Morrison are based in AU?
Arguably it’s impossible to tell if the current investments are a bubble or not, it’s worth noting however that they faced criticism when they invested initially into CDC because it wasn’t infrastructure.
Secure long term contracts & locked in funding is key to mitigate any long term risks
"How listed Real Assets can also benefit from the Artificial intelligence (AI) boom"
https://www.livewiremarkets.com/wire...rm=READ%20MORE
I just submitted my discounted share entitlement.
Im taking my full offer.
Onwards and upwards for IFT.
IFT newsletter, for those who don't receive it.
Infratil Newsletter
2 July 2024
We are pleased to report that as we celebrate 30-years of Infratil we continue to build on our legacy of success. During the quarter we announced a strong financial result for the year ended 31 March 2024, while also making significant strides in growing our portfolio.
Since the announcement of our annual results the team has been busy with the announcement of an approximately NZ$1,150 million equity raising to fund further investment into data centre operator CDC’s accelerating growth, as well as provide more flexibility for growth across our global portfolio. Full details of the equity raise are available on our website.
Separately, we have nearly completed our 2024 retail investor roadshow, having met with almost 2,000 investors across 17 presentations throughout New Zealand. These meetings provide a great opportunity for shareholders to raise questions, voice concerns, and engage with management. We appreciate and take on board all the feedback we receive from these sessions.
Thank you to all the investors who were able to attend one of these presentations.
Across our portfolio
Digital
CDC is continuing to see a surge in demand for data centre capacity on the back of cloud adoption and significant investments in Generative AI. This rapid increase in demand has seen CDC enter advanced negotiations with customers for over 400MW of capacity at multiple sites across the CDC footprint. This capacity is expected to come online over the next 4 to 5 years.
In parallel, CDC’s development pipeline continues to expand with the addition of its Marsden Park development, a 720MW campus (more than double CDC’s current operating capacity), bringing CDC’s total planned capacity to around 1,870MW targeted to be operating, or under construction, by 2033.
Kao Data has been granted planning permission for a new, 40MW, sustainable data centre in Stockport, Manchester. The 40,000m2 former industrial site, which will become operational in 2026 following its redevelopment, will create a leading infrastructure hub to support Greater Manchester’s fast-growing and diverse technology ecosystem - positioning the region as one of the UK’s largest high-performance computing and artificial intelligence clusters outside of London and the Oxford-Cambridge arc.
On its one-year anniversary, One NZ launched One Wallet, a digital wallet for its customers, best described as like air points to help buy your next mobile phone. Already One NZ has stacked over $30 million dollars in value in its customers' One Wallet as part of its mission to be the best place to buy a new phone in New Zealand. One NZ customers can access their One Wallet balances and watch them grow via their My One NZ app and the balance can be redeemed on any phone purchased on an interest free term.
For the third year running, One NZ has been awarded Aotearoa's ‘Best in Test’ mobile network 2024 by independent benchmarking organisation umlaut company, part of Accenture. Mobile connectivity is now an essential part of daily life, and so you need a mobile network that performs at its best. These results show One NZ leads overall, including on voice and data performance, plus reliability.
Renewables
In May, Longroad Energy welcomed a number of dignitaries, including Arizona Governor Katie Hobbs, to its Sun Streams Complex. The nearly 200 guests celebrated the progress made to date at the 6,000+ acre solar and storage complex and the many benefits it is delivering to Arizona, including generating clean, solar energy to power 200,000 average American homes, supporting 1,000 construction jobs and providing more than $300 million in benefits to Arizona schools and communities through its long-term leases with the Arizona State Land Department and tax remittances.
Manawa Energy has continued to progress and expand its pipeline of renewable development options in New Zealand, now with a development pipeline of more than 1,200MW of secured solar and wind development options. The projects in its pipeline are expected to present exciting, value-accretive growth opportunities to complement Manawa’s existing asset base.
Galileo has announced that it has signed a Corporate Power Purchase Agreement with Cargill, for a new solar PV project to be built in Southern Italy. The planned project will have a total capacity of 79MW and is expected to provide Cargill with approximately 1TWh of green electricity over a period of 10 years, avoiding the emission of more than 450,000 tonnes of CO2.
Gurīn Energy has announced a significant step forward in the development of two solar power plants, Gurīn’s first projects in Thailand. In partnership with WHA Utilities and Power Public Company Limited, Gurīn has signed two 25-year power purchase agreements with the Electricity Generating Authority of Thailand. These agreements involve selling clean, emission-free energy from two solar projects: the 69MW Stella Power 1 in Ratchaburi, set to be commissioned in 2029, and the 59MW Stella Power 2 in Kanchanaburi, set to go online in 2030.
Healthcare
RHCNZ Medical Imaging announced the opening of two new Hamilton branches, including one at Te Kōhao Health Wellness & Diagnostic Centre.
This new clinic, one of the first of its kind, is a partnership between Pacific Radiology and Te Kōhao Health. The clinic will help reduce health inequalities for Māori in the Waikato by providing a new model of care that minimises barriers to access and provides timely, essential health services in an appropriate, whānau-led environment.
RetireAustralia celebrated an important milestone marking the completion of the third and final stage of The Verge at Burleigh G.C., and the opening of its first Care Hub. The Verge offers 168 one, two and three-bedroom independent living apartments, a wellness centre, activities hub, home care services and now a 10-suite Care Hub, an alternative to aged care in an intimate, homelike environment.
Airports
Wellington Airport has welcomed the arrival of a 500,000-litre shipment of Sustainable Aviation Fuel for Air New Zealand, marking the first time the low emissions fuel has been used in the capital and marking a trifecta of decarbonisation wins for the airport in the last year.
It follows Air New Zealand selecting Wellington and Marlborough Airports to host its first all-electric commercial service, transporting cargo across Cook Strait from 2026.
Air New Zealand and Wellington Airport also collaborated on a hydrogen trial earlier this year for charging ground service equipment, supported by Hiringa Energy and Toyota New Zealand.
Elsewhere – Rivers of Wind (pictured above)
Last year our inaugural Sustainability Report and Climate Related Disclosures featured artwork from RIvers of Wind, a digital artwork by Delainy Jamahl. We were delighted to showcase this local artistic talent, especially because it can be interpreted to represent many of the characteristics of Infratil's portfolio through the intersection of climate, renewable energy, digital technology, and of course, Wellington Airport.
Delainy has created a new immersive art space, The Grid, opening in the heart of Wellington this July and August, inviting you to experience art in a whole new light.
Be swept away in Rivers of Wind, a mesmerising immersive experience that draws on 8 years of weather data from the Wellington Airport weather station to visualise the invisible. Rivers of Wind explores the intersection of technology and nature and their effect on the human experience in this captivating exhibition. A continuously looping 48-minute digital artwork, Rivers of Wind is presented in a wrap-around projection environment with a surround soundtrack from renowned New Zealand composer Rhian Sheehan with musician Ed Zuccollo.
We would love for you to support this project over the coming months. The Grid is located at 18 Haining St, Te Aro, with tickets ranging from $15-25.
Thanks again for your continued support of Infratil. We look forward to meeting up with investors in person again at our upcoming Annual Meeting on 22 August in Wellington.
For additional updates, you can also follow Infratil on LinkedIn.
Arguably existing holders are selling now to free up funds to participate in the Share Purchase Plan. Given IFT are seeking to deliver enough shares so no holder gets diluted (IFT say 136 new shares per existing 1,000 shares), less risky to sell now to buy rather than be a price taker in a couple of weeks. Added benefit of not needing to fund the SPP shares in the interim.
[QUOTE=fastbike;1059278]You do realise you can trim the quote you are replying to ?
Do now. thanks Fastbike!
Ferg has put a lot of effort here into unpicking the CDC profit figures for FY2024. I find it rather overwhelming to read in that format. So I have taken Ferg's numbers and represented them as 'Statement of Comprehensive Income'. This way, I think it is easier to see where all the numbers fit in and the 'missing (calculated) numbers' come from.
CDC Statement of Comprehemsive Income FY2024 $A Reference Revenue {A} $412.3m AR2024 p80 less Operating Expenses $141.3m Calculated {A}-{B} equals EBITDAF {B} $271.0m Capital Raising Presentation, p27 less -I-Fdv+Revaluations-Depreciation $28.7m Calculated {C}-{B} equals Net Profit Before Tax {C} $299.7m Calculated {E}+{D} less Tax {D} $97.8m 0.9272 x $50.9m/0.4824= $97.8m, ref AR2024 p80 equals Net Profit AfterTax {E} $201.9m ref AR2024 p80 less Other Comprehensive Income Loss {F} ($12.2m) ref AR2024 p80 equals Total Comprehensive Income $189.7m Calculated {E}-{F}
I have arranged the table to look complete. But the key point is the row where Interest deductions (which are affected by capitalisation issues), supporting foreign derivative changes (unknown) depreciation (not specifically quoted) and revaluation of assets (not separately disclosed) is opaque. We know overall what happened. But we don't know the elements that made up the bigger picture. Nevertheless Ferg has had a crack at demuddying the waters further.
There are two ways in which the value of non-current assets can increase:
a/ Some new non-current (i.e. long term) assets are built.
b/ Some existing long term assets are revalued upwards.
The difference in value of non-current assets, on the books, over the FY2024 year, was: $6,666.0m-$5,762.3m= $903.7m. But some of those assets have been built during the year as a result of capital expenditure of $560.8m (AR2024 p26). So this implies that the 'revaluation component' of the increase in long term assets was: $903.7m-$560.8m=$342.9m. However, there will have been a depreciation cost for the year that will have been 'netted off' against any revaluation. So it is more correct to call the $342.9m 'R-D'.
From the Statement of Comprehensive Income above:
EBITDAF - (I +Fdv) +(R-D) = NPBT
=> $271.0m - (I+Fdv) + $342.9m = $299.7m
=> (I+Fdv) =$314.2m
...where 'I' is the net interest bill and 'Fdv' are foreign currency derivative movements. The FdV's could be related to currency hedging the New Zealand activities of CDC, or perhaps the acquisition of capital equipment from committed contracts most likely priced in USD.
Averaging the long term debt (AR2024 p80) between the FY2023 and FY2024 balance dates:
($4054.6m+$3428.1m) / 2 = $3,741m
CDC is Australian based. However, there is no mention about hedging NZD costs incurred building data centres in Auckland, back to the native AUD currency for CDC. This doesn't mean CDC aren't doing it. But Auckland's EOFY2024 operating capacity of 28MW is only just over 10% of the capacity of CDC. And that proportionate number will be getting smaller with the mega data centre expansions announced in Australia.
https://www.nzx.com/announcements/433951
My inkling is that any foreign exchange contracts will likely be tied to equipment ordered for data centres, equipment that is likely denominated in USD from US based suppliers. So it is probably not correct to see this expenditure as making up part of the 'interest' charges. But that is my speculation. There is no way to know 'for sure.'
SNOOPY
Some very odd observations about ift being in data centres - referring to the growth in demand for their use as a bubble and insinuating MCO are naive and Kiwi focussed. What a load of ill judged tripe! MCO are global, have sector experience and have some of the best corporate minds globally. Idiotic to think they’ve stumbled into some good investments. They’ve manoeuvred their way into fast growing assets through thoughtful future focussed insight. No lottery ticket luck here.s just plain hard graft and patient investment.
The data centres have an average forward contract tenure in multiple decades, and cdc’s growth is not contracted until they’re mostly forward sold. The debt providers that analyse a lot of data centre businesses describe CDC as a unique data centre asset (the best in the world form a credit perspective) given longevity of forward contracts and the high quality of their clients. So pray… explain the risk?
As to the big boys swamping them… ignores CDC’s competitive advantage of being co-owned by AU super and ift (asx/nzx listed entity as helping Govt, and large AU corporations get around cloud based data sovereignty issues. It ignores the quality execution by CDC management to date.
Finally to think AI is some buzz word blip and it’s a passing phase before the bubble bursts demonstrates a remarkably myopic view of technology that I think beggers belief.
Needless to say happy holder and once again we’ll see how it plays out for CDC over the coming years. I suspect I know. Applied for $150k. Bring it on. Ift lining up $2bn plus in capacity growth for CDC. It should be lauded that a NZ originated story is at the epicentre of growth and change. May all NZ KiwiSaver funds benefit.
Let’s back it.
Great insightfull post 3141592 as was your post 22-03-2024
My thoughts said very succinctly
I've stretched my OD to the max getting a swag in the placement & will be topping up more in the retail offer.
My "share" portfolio now 80% IFT, IFT is now 30% of total FUM & share portfolio
I'm expecting earnings to be flatter for next year while they build their pipeline but when they're built ..... on wards & upwards
Over $10 b market cap I expect some indices will have to buy more.
At the investor roadshow I had a chat to Andrew Carroll the CFO.I can't speak more highly of him.He was very open & had his fingers on the pulse of all the IFT divisions even thought he hasn't been in the job for a long time.He told me he felt he works for IFT rather than M&Co.
Regarding M & Co I believe they are considerate of IFT shareholders regarding their fee, that they are entitled to be paid, by accepting IFT shares in liu of the fee.The price that the IFT shares allocated to M & Co is not at discounted rate either in my view.The IFT shares allocated for fees from memory works out only 2%? of total IFT shares issued which in my view is very reasonable for their skills & the value they are creating.IFT/M & Co management is a profit centre on its own.
My view is M& Co contract also works to the benefit in blocking any takeovers.Why would the IFT shareholders accept a 20% premium if they can easily get that by holding the shares for another year plus compounding returns year after year?
Snoopy’s hard work been listened to …CDC valuation gone up heaps
http://nzx-prod-s7fsd7f98s.s3-websit...951/422095.pdf
The goose keeps laying golden eggs:
https://www.nzx.com/announcements/433951
CDC Independent Valuation - 30 June 2024
4/07/2024, 08:37 NZST, MKTUPDTE
The 30 June 2024 independent valuation of Infratil’s investment in CDC shows an increase of A$466 million over the three months since the 31 March 2024 valuation. Infratil’s 48.25% investment in CDC is now valued at between A$4,159 million to A$4,940 million (with a midpoint of A$4,524 million), up from A$3,783 million to A$4,368 million (with a midpoint of A$4,058 million) at the end of March 2024. The increase in valuation reflects the updated CDC pipeline disclosed at the announcement of Infratil’s June 2024 equity raising. CDC is currently in advanced negotiations with customers for over 400MW of capacity across multiple sites, expected to come online over the next 4-5 years. As a result, CDC is developing a new Sydney data centre campus at Marsden Park, contributing to an increase in CDC’s future build capacity by 661MW to 1,197MW and total planned capacity of 1,887MW (up from 1,220MW in March 2024). This expanded pipeline demonstrates the favourable market tailwinds for data centres and the strong progress in CDC’s customer discussions. Total operating capacity has increased by 34MW since 31 March 2024, reflecting CDC’s first data centre development in Melbourne (Brooklyn 1) commencing operations.
Region Status Build Capacity (MW), as at 31 March 2024 Build Capacity (MW), as at 30 June 2024
Canberra Operating 117 117
Sydney Operating 123 123
Melbourne Operating - 34
Auckland Operating 28 28
Total Operating Capacity 268 302
Canberra Under Construction 39 39
Sydney Under Construction 158 158
Melbourne Under Construction 151 121
Auckland Under Construction 68 70
Total Under Construction Capacity 416 388
Canberra Future Build 91 90
Sydney Future Build 269 872
Melbourne Future Build 98 157
Australian Expansion Future Build 36 36
Auckland Future Build 42 42
Total Future Build Capacity 536 1,197
Total Capacity 1,220 1,887
The blended cost of equity used in the valuation has increased from 11.25% to 11.50% between March and June 2024. This primarily reflects an increase in gearing as a result of higher forecast debt levels as CDC continues investment in its expanded development pipeline. The increase in gearing is partially offset by a decrease in the asset-specific risk premium, driven by the valuer’s assessment of the status of CDC’s customer discussions and their overall view of CDC’s ability to deliver on its forecast growth. The risk-free rate has remained constant at 3.90%. From a funding perspective, this valuation reflects the guidance provided as part of Infratil’s June 2024 equity raising, with Infratil’s pro-rata share of equity contributions to CDC at approximately A$600 million over the next two years. This represents an increase of ~A$150 million (on the same pro-rata basis) relative to what was assumed in the March 2024 valuation. CDC intends to continue accessing a range of debt markets to provide further funding for its expanded development pipeline. Net debt as at 30 June 2024 was A$3,262 million. CDC’s FY2025 full-year EBITDAF guidance of A$320 million to A$330 million remains unchanged.
Enquiries should be directed to: Mark Flesher Investor Relations mark.flesher@infratil.com
Appendix 1 – Independent Valuation Summary 30 June 2024 Valuation Methodology 31 March 2024 30 June 2024 Primary valuation methodology DCF using FCFE (with a cross check to comparable companies and precedent transactions), surplus and underutilised land at cost Forecast period 15 years (2039) 15 years (2039) Enterprise value A$11,118m A$12,723m Equity value A$8,412m (IFT share A$4,058m) A$9,376m (IFT share A$4,524m) Key Valuation Assumptions Risk free rate 3.90% 3.90% Asset beta 0.55 0.55 Cost of equity (blended rate) reflecting the assessed risk of the spectrum of CDC’s activity, from operating data centres with contracted revenues through to developing projects without contracted revenues. 11.25% 11.50% Terminal growth rate 2.5% 2.5% Long term EBITDA margin 85% 85% Capex Future capex reflects CDC’s published development pipeline Valuation assumes no development beyond 2031 Valuation assumes no development beyond 2033
I would summarize the announcement differently. Plans have been laid out for the new hen houses until 2033, into which the 'golden geese' will be housed. Nine years worth of golden eggs have already been booked as 'profit today', even though more than half the hen houses do not yet exist and most of the golden geese producing those eggs are yet to be born. The announcement today is an egregious exercise in 'future eating' which may or may not come to pass as laid out. Beware the potential of 'bird flu'.
SNOOPY
I agree that we might be looking through rose tinted glasses, but would you agree that yours might be Jaded. I feel that these Morrison and Co guys are super smart individuals and talk to like minded people. They see the trends and swim with them and if they see no further growth potential, they will sell it. I have had this debate with Blackpeter for over the last few years and to this day he has called it wrong and missed out on so many gains and dividends.
Not saying it can't drop, but I see no need to reduce yet and have made thousands since 2014. This by far has been my best longterm hold. I could have made more with FPH, but I was wrong and called that wrong for years.
I guess where Snoopy is heading (correct me if I am wrong) is he is trying to assess the profitability of CDC, in particular from a viewpoint of investors and the return on investment for data centres. And how that may or may not apply to Spark. Fair enough for having a go and I agree the current financials for CDC do not look appealing. It is hard to see how the valuation is justified when looking at just the current financial results.
However IFT and/or CDC would have engaged some suitably qualified & very smart cookies to assist with the valuation. The over-arching issue for investors is we are not in possession of the same amount of information about CDC than those making the valuation and investment decisions.
Whilst I am happy to dig around and figure out some numbers, I do so without judgement given IMO it is too early to make any meaningful calls.
In particular, if we try to assess profitability while CDC is still growing, then we are assessing something that is not only half built but the part that has been built is half sold. {I find the current sale metrics a little confusing in that I am not 100% sure what is meant by "white space" and why this is included the sold %.....but I digress.} The point being that any return on assets or equity will be meaningless at the moment, until we can get a measure on the value of completed developments versus those that are still a work in progress. Some assets may be bare land, whilst others might be almost completed - none of which are currently making a positive contribution to current EBITDAF.
I note that the valuation methodology says "surplus and underutilised land at cost" which could be conservative. But to try and figure out this component will be an exercise in futility.
At the risk of stating the obvious, the biggest questions for me are whether 85% EBITDAF and if projected sales can be achieved. In a fast growing market with such a high EBITDAF, I would expect to see more competitors entering the market which could impact pricing but that could be a while away. This graph and explanation are still applicable:
https://textbook.stpauls.br/Business...t/page_115.htm
KPIs for investors to watch......CDC $ sales growth, facility sold %, EBITDAF % and return on equity (once development slows). IMO everything else is noise. But we should be careful of trying to make assessments now based on something that is incomplete.
CDC certainly has an advantage in its traditional market of government linked customers in Canberra. This is not where they are expanding however as the under construction and future development data above shows. Most of the new capacity is in Sydney and Melbourne, both much more competitive markets. Their biggest future customers, big tech drives a hard bargain and will drive margins down or just build their own data centres in competition. So CDC's average operating metrics will decline over time leading to a lower valuation multiple. Deworsefication.
As to whether there is a data centre boom on at the moment, come on, have a look around the world, Malaysia is planning 5GW of capacity. The question is whether demand will continue at the same pace. I gave me thoughts on why I wouldn't bet on it in a prior post.
If the investment was just in CDC I would be inclined to back them as one poster suggested. Unfortunately there are significant fees layered on top that make the investment riskier and less rewarding than it needs to be. We are talking about $230-280m a year or around 3-4% of market cap yearly payable to a very small team. This is partly why IFT is constantly raising capital, something I have learned to distrust in listed companies. A much larger IFT benefits Morrison & Co much more than ordinary shareholders.
Singapore hates losing to Malaysia haha. Johor and Batam will always have lower costs with cheaper land, power and wages.
Assume they will talk renewable but actually build more LPG powered plants. Looks like that is the case.. Hydrogen ready sounds cool and sustainable eh. Don't ask how hydrogen is created!
Princton Data Group who are building some of these data centres is a lot like CDC but with richer backers. Useful for comparison purposes.Quote:
Singapore's Energy Market Authority (EMA) has announced plans to build two more natural gas, hydrogen-compatible power plants by 2030 to help ensure energy security and reliability amid growing electricity needs.
Singapore plans to build two more hydrogen-ready natural gas power plants by 2030
"Gurin Energy awarded conditional approval to import low-carbon electricity from Indonesia to Singapore"
https://morrisonglobal.com/news/gur%...-to-singapore/
"The power generation is planned on the Riau islands and underpinned by 2,000MW of Solar Photovoltaic installed capacity and c. 4,400 MWh of battery storage, one of the largest such planned projects in the world."
Interesting, Riau Islands are a tough place to do business but good luck to them, looks like a win-win for all involved and hopefully IFT.
Confirms that IFT's two big bets (data centres and renewable energy) covering half of the company's assets are linked and thus so will be success. An increase in risk compared to what shareholders are used to.
https://infratil.com/news/cdc-indepe...-30-june-2024/
The metrics in this links Appendix Page 3 May shed more light
On the subject of making a 'range of guesses' around depreciation charges, I feel there is enough information in the Spark annual accounts depreciation schedule (SPK AR2023 p113) to make a pretty good informed guess. I have previously stated that for CDC (light on computer rack equipment that is largely supplied by the customer) I think this should be 40 years, based on:
Depreciation Category Depreciation Time Building 15-53 years Air Conditioning 8-20 years Power Systems 3-25 years Computer Equipment 2-8 years Internal IT System Assets 3-15 years
I am thinking the datacentre building, by far the largest capital value item, will have a life of 50 years, averaged back to 40 by the lower value shorter life power and internal IT equipment and the air conditioning. Non current assets at EOFY2023 (the time point used for setting depreciation rates) were $A5,762.3m. So 1/40th of that value is $144.1m
$342.9m = 'R-D' => Revaluation over FY2024 = $342.9m + $144.1m = $487.0m
That figure is considerably greater than the net surplus for FY2024 of $201.9m. This is fairly clear evidence to me that CDC made an overall loss on its day to day operations over FY2024 (even if they probably did make an operational profit over FY2023). But considering the build program currently on the plans and being executed, that is what I might expect in a business like this at its current state of development. Fortunately the 'future valuation' boffins descended on the accounts and decided that enough money would be made in the future to put an offsetting $487.0m into the income statement. That means there was no need to upset the Infratil shareholders about the operational performance of CDC. Nothing like some accounting spin to keep those punters happy.
And if you believe the funding strategy, slide 14 of the Infratil Capital raising Presentation, I would say none of the equity raised from Infratil will be going to repay CDC debt. I would say it is build, build and build some more from here.
I am not too worried about solving to find the derivative amounts in the equation puzzle. They should all come out in the wash as the build program rolls out.
SNOOPY
It has been pointed out to me that I have made an error in my depreciation estimate calculation. The error being that I have ignored the owned land on which the datacentres are built and onto which any expansions are going to be built. We do have a bit of an obsession in NZ with 'land'. But the vast majority of the CDC land is of course in Australia where most of their business is located.
The interesting thing about datacentres is that when signals are being fired back and forth to them along optical fibres at up to 70% of the speed of light the distance from the point of data use to the point of data storage becomes less relevant. IOW whether the datacentre structure is 5km away or 50km away, the operator on the end is not going to to be able to tell much difference. This means datacentre builders can be a bit less choosy about where they build their structures. They do not have to compete with logistics distribution houses for prime space.
Looking at Googlemaps, it appears the Canberra CDC datacentre there is about 20km out of the city 'in the middle of nowhere'. So I suspect the land bank value of CDC is actually not that high - probably no more than 10% of the value of all CDC long term assets. This means my correction to overall depreciation to take account of land (which does not depreciate) is likely relatively small. Maybe applying to only 10% of the value of the long term assets?
Non current assets at EOFY2023 (the time point used for setting depreciation rates) were $A5,762.3m. 90% of that value (being the non-land assets) amounts to $A5,186m. So 1/40th of that value is $129.7m
The difference in value of non-current assets, on the books, over the FY2024 year, was: $6,666.0m-$5,762.3m= $903.7m. But some of those assets have been built during the year as a result of capital expenditure of $560.8m (AR2024 p26). So this implies that the 'revaluation component' of the increase in long term assets was: $903.7m-$560.8m=$342.9m. However, there will have been a depreciation cost for the year that will have been 'netted off' against any revaluation. So it is more correct to call the $342.9m 'R-D'.
The reduction in D from $144.1m to $129.7m, equating to $14.4m, means that the Revaluation part of the 'R-D' equation 'R' can be smaller by that same amount to make the $342.9m 'R-D' = $342.9m equation balance. But at $342.9m + $129.7m = $472.6m, it still a large revaluation amount.
SNOOPY
Yes, Morrison's/Infratil have a good historical record. I don't think anyone is disagreeing with that. But conflating that record with the idea that they should not be scrutinized when venturing outside of their areas of proven competence is not a logic leap I would make.
I suspect the forward contract agreements are not as water tight as has been presented. I mean, what business manager is going to sign up to an unencumbered 30+ year property lease deal? That sounds insane. I would suggest we are more likely seeing a 10 year property deal with two ten year rights of renewal. Don't get me wrong, that would still be a good deal for CDC. But it would leave room for a client to ease out of the arrangement, should technology take a different turn. Like with the rise of 5G and more 'local hub', rather than 'central hub' processing (one technological risk you seem unaware of).
I agree having a locally owned outfit holding sensitive government information onshore is an advantage card that CDC have played well so far. But I haven't heard it said that it is government policy not to use the big boys like AWS and Microsoft Azure. And the fact that such operators are starting to build their own operations 'down under' suggests that they too see the value in having local infrastructure on the ground. I suspect the scale low cost funding from their US parents will make them cheaper too.
'Quality execution by CDC management to date' doesn't provide any guarantee for future heavyweight bouts. You are only as good as your last fight in this heavyweight data game.
You might find some of the adoption of AI does not go as smoothly as you think. I think of the AI revolution as akin to what happened with call centres. Company's 'save money' by going to Asian boiler room help desk operators who can be helpful but only to a point. As a counter example, Telstra has gone back to Australians working in Australian based call centres - not a cost out exercise - but nevertheless still 'worth it'. Implementations of such brilliant ideas like just communicating through robots does not always go entirely to plan.
SNOOPY
Morrisons are all about infrastructure and this, with all its parallels with existing and historical investments, is no different.
Regardless, everyone should always be scrutinised irrespective of whether it is "their area" or not.
The hog sees the "AI" landscape as being more similar to electrification or digital networks rather than call centres.Quote:
You might find some of the adoption of AI does not go as smoothly as you think. I think of the AI revolution as akin to what happened with call centres.
A reminder that today is the last day for shareholders to apply for discounted shares in the retail offer
I have had another prod off line about getting my estimate of a depreciation deduction wrong. The issue, this time, is that long term assets under construction are not depreciated until construction is finished. A fair cop. So what proportion of long term assets 'on the books' are under construction? Some good background information on this is in the Infratil Capital raising presentation:
https://infratil.com/news/infratil-a...-equity-raise/
From slide 7:
"388MW under construction across current footprint"
From slide 13:
"Operating capacity 302MW" "388MW expected to be completed by the end of FY2026."
So we can think of the 'under construction' section of future data centre roll outs as being completed over 3 years. That averages out at 388MW/3= 129MW to be completed over each of FY2024, FY2025 and FY2026. So we could say the paid for work under construction represents ( 129MW/(129MW+302MW) =) 30% of 'long term datacentre assets'.
Non current assets at EOFY2023 (the time point used for setting depreciation rates) were $A5,762.3m. 90% of that value (being the non-land assets) amounts to $A5,186m. 70% of that value (being the depreciable assets that have finished construction) is $3,630m. Assuming these assets depreciate on average over 40 years, this gives an annual depreciation charge of ($3,630m/40=)$90.8m.
This insight further reduces the FY2024 datacentre revaluation 'R' required to match known declared CDC profits over FY2024
'R-D' = $342.9m => R = $342.9m + $90.8m = $433.7m 'which is still a large amount'.
SNOOPY
Thank goodness that round of capital injection is over. I'm not really up for an annual billion dollar cap raise.
Hopefully IFT will have an Airport on the block and maybe funds in the bank from Retire Australia sale to fund the next expansion round.
I can sympathise with & agree with what you saying Toddy.
The cap raise came right out of the blue given it was only a week or so before that they had said they had $800m available for investment.
The size of the cap raise does highlight the investment oppurtunities they see in their portfolio though.
Good for NZ inc given that 40% of their investors are NZ retail investors.
The offshore returns should help the balance of trade returns in the long run :).
If we consider our share investments as a business, any interest to pay on money borrowed to take up this offer & stay pro rata is a pretty small proportion of the investment portfolio when considering the dividend returns.
The above post is on the side of being 'poorly researched' by my standards. Assuming that land makes up 10% of the long term asset portfolio was just a guess. Can I back it up?
'Oneroof' has an estimated value of 23 Popes Road at Takinini, which is the home of Spark's Takanini data centre
https://www.oneroof.co.nz/property/a...pes-road/JRyhD
The June 2021 estimated value was $29.5m, made up of land $10.2m (c.f. $5.6m in 2017) and improvements $19.3m (c.f. $17.5m in 2017). Interestingly 'Oneroof' records the property being sold as a bare land purchase in 2014 for $4.42m. This would have been the time that Spark bought the property for the development of the first stage of their Takanini datacentre in 2014.
https://www.reseller.co.nz/article/1...ta-centre.html
The reported total development cost was reported as $60m back in 2014 (which would have included the land cost). Now $4.42m/ $60m = 7.4%. That means the land purchase was just 7.4% of the project cost at the time. Since opening, the Spark Takanini datacentre has undergone a multi-million dollar capability upgrade. So as far as book value goes, the value of long term assets at the Takainini site that are land may be as low as 5%.
One can't be sure that such development costs are indicative of the relative long term assets values of a new datacentre portfolio built by CDC today. It looks like land in Auckland at least has shot up in value in relative terms since the Spark Takanini datacentre was conceived. Yet despite this increasing land price effect, I believe this Spark Takanini site data is good supporting evidence that my overall guess of the land part of the CDC long term asset portfolio - being no more than 10% of the total long term assets on the books - is reasonable, and maybe even a little high.
SNOOPY
When you knocked down with yet another intellectual 'sucker punch', the only thing to do is to get up again. With the latest information and interpretations flowing through the knowledgometer, time for another crack at this exercise.
We know that Infratil own a 48.24% stake of CDC. Rather than create possible extra confusion by trying to adjust for the Infratil share all the way through, I will use the raw CDC numbers and make any Infratil ownership share adjustments right at the end.
.
Interest Calculation
Interest which is used to finance construction projects is subject to 'capitalisation of interest' in any net profit calculation. If interest is capitalised, it no longer becomes an expense.
Starting from the Infratil capital raising presentation:
https://infratil.com/news/infratil-a...-equity-raise/
Slide 14 shows a key CDC metric is 7-10 times leverage. I will use the larger number (10), because that will give me the largest interest capitalisation effect. A leverage ratio of 10 means $10m of debt for every $1m of equity is CDC's preferred new project 'funding balance'.
If we look at the limited CDC balance sheet information we are given (AR2024 p80) total assets rose from $5,872.4m (EOFY2023) to $6,820.7m (EOFY2024), which is a rise of $948.3m.
Let's assume that all of that increment represents new data centre builds, being constructed over FY2024. Now, new assets are funded by a combination of debt and equity. With a 10:1 leverage ratio, we are looking at 'new project funding units' of $948.3m/11= $86.2m. In this instance this means $86.2m of equity funding, with the balance $948.3m-$86.2m = $857.1m funded by debt. Interest which is associated with this $857.1m in debt funding is interest that becomes capitalised.
As before, I assume total debt, across the year had a representative value of $4,251.1m. Let's say that USPP funding and other bank funding was secured at a rate of 4.5% (a revised pure guess on my part). That means the annual interest charge for CDC would be: 0.045 x $A4,251.1m = $191.3m.
However, this calculation does not take into account the proportion of interest that was capitalised. The amount of interest capitalised represents $857.1m/$4,251.1m = 20.2% of the outstanding debt. 20.2% of the representative interest bill is: 0.202 x $191.3m = $38.6m. So $38.6m is the amount of the pool of net interest that I would expect to be capitalised, following on from all of my assumptions.
Depreciation and Amortisation calculation
My average modelled depreciation time remains at 40 years. The buildings may be on the books with a longer life than that, perhaps 50 years. But all of the cooling equipment will depreciate much faster than 40 years. So 40 years is my compromise 'combined total depreciation schedule number'. Amortisation is assumed to be zero over the period, as no goodwill would have been booked on the balance sheet for a 'green field build' data centre.
https://infratil.com/news/infratil-a...-equity-raise/
From slide 7:
"388MW under construction across current footprint"
From slide 13:
"Operating capacity 302MW", "388MW expected to be completed by the end of FY2026."
So we can think of the 'under construction' section of future data centre roll outs as being completed over 3 years. That averages out at 388MW/3= 129MW to be completed over each of FY2024, FY2025 and FY2026. So we could say the paid for work under construction represents ( 129MW/(129MW+302MW) =) 30% of 'long term datacentre assets'.
Non current assets at EOFY2023 (the time point used for setting depreciation rates) were $A5,762.3m. 90% of that value (being the estimated non-land assets) amounts to $A5,186m. 70% of that non land value (being the depreciable assets that have finished construction) is $3,630m. Assuming these assets depreciate on average over 40 years, this gives an annual depreciation charge of ($3,630m/40=)$90.8m.
iif/ Recalculating Net CDC Profit after once again revising interest charges
According to 'forest' who attended the Infratil capital raising presentation, CDC presently earns between 10-15% on its different assets. So I will 'plumb down the middle' and take my asset return percentage being 12.5% as my estimate. I therefore estimate the income generating ability of those CDC assets on the books at EOFY2024, which I will call EBITDAF, to be: 0.125 x $1,403.4m = $175m. However, it seems that in reality the EBITDAF earning ability of CDC was a little above this lofty goal, coming in at $271m (although this is admittedly a definitively before tax figure. It could be that the return touted by 'forest' of $175m is NPAT).
I now have two operational NPAT figures for CDC over FY2024 to present:
Using NPAT = 0.7 (EBITDAF - I - DA); (assuming the Australian corporate tax rate of 30%)
For no capitalisation of interest charges, I get:
'Operational NPAT' = 0.7 ( $271m - $191.3m - $90.8m ) = -$7.8m, of which the IFT share is 0.4824 x -$7.8m = -$3.3m
For capitalisation of interest allowed, I get:
'Operational NPAT' = 0.7 ( $271m - ($191.3m - $38.6m) - $90.8m ) = $19.3m, of which the IFT share is 0.4824 x $19.3m = $9.3m
I am -still- not guaranteeing that I have got my operational profit calculation right. But even with some more imagined future tweaks, I see no way to turn a $9.3m profit into a (0.4824x$201.9m=)$97.4m profit (the NPAT declared in AR2024 p80). That means the $97.4m that Infratil 'earned' from CDC must be largely (over 90%) from asset revaluations, based on what CDC 'expects to earn' when the current CDC datacentre construction program is complete.
(The actual operational NPAT is adjustable and determinable by the gearing of CDC, which will have been decided upon by Infratil and its ownership partners. It could easily become more profitable by having less debt in its underlying structure. But to avoid paying back some of Infratil's injected capital as a 'tax bill', Infratil have kept the interest bill high. This is what accountants call 'tax efficiency'.)
SNOOPY
Can AI solve the problems it creates?
"AI's power struggle: An energy crisis in the making"
"Considering the broader implications of AI's trajectory, we envisage dramatic consequences for US power demand.
The chances that we need 1 GPU per person is increasing quickly
Combined, search, co-pilots, summarisation, the automation of processes and service offerings of businesses, autonomous driving and gaming alone may increase the amount of GPUs we need over time to somewhere around 1 GPU (of current NVIDIA Hopper quality) per person. While the computational power of GPUs will increase and improve the ability to make computational networks, so will their price and power usage.
In 8 or so years, the amount of electricity needed by data centres is expected to increase to 27% of total US electricity consumption from around 5% today
Implications for Renewable Energy
The implications of the forecast are significant. To have 1 GPU for every 3 people, we need to increase the grid by around another 1/3rd. To put this into context, US electricity demand has been growing by around 0.5% per annum for many decades, but that might ramp 6x to around 3% per annum in just a couple of years. The increase in the number of gas-fired power plants and renewable energy farms needed to enable this technology will be significant relative to how many we have in place today.
None of this demand for electricity accounts for the increasing demand from our need to reduce our fossil fuel consumption. The electrification of cars, engines more generally, other transport (ships, planes and trains) and other equipment that currently uses oil will add to this demand for electricity.
This increase in demand is attributed to several factors, including electrification, manufacturing, onshoring, LNG, crypto, greater industrial loads and data centre growth. Recent advancements in GenAI are compounding and accelerating these factors, leading to the formation of the next power demand super cycle…To be clear, it takes only a fraction of what is being forecasted to be in this super cycle.”
Before these technologies (AI, semiconductors, autonomous vehicles, search, co-pilots, automation of processes, summarisation, gaming to name a few) can reach their full potential, we believe there’s a high chance that we’ll first run out of cheap power."
I see no one has extroplated what the $2+b of available funds to invest means yet
With the leverage of 6x for data centers & renewable energy then could easily be $12+b in new investment ie doubling the AUM that IFT already has.
This is likely to happen over the next,2? years.
With revaluations then what will EBITDA be?
IFT is shovel ready,are investors?
No wonder Fisher Funds have chosen to sacrifice 3% of their holdings in great MFT to invest in rights of IFT ....both their flagship NZ Growth Fund and KFL did same ...they see more potential in IFT then MFT ...cud be short term play as they can always reverse ahead at some profits ...KFL IFT holdings nearing 20% mark so will need slow pruning ahead ...but yours 80/20 going great guns I reckon
"One advantage working in favour of local data centre operators’ is that “big tech” (i.e., Amazon, Alphabet, and Microsoft) are struggling to navigate local councils, power utilities, costs and complexities of development approvals, etc. This means local operators that have already secured large land banks close to major population centres are in a prime position to service the big overseas players (thank goodness for good old Aussie bureaucracy and red tape!)"
https://www.livewiremarkets.com/wire...E%20AI%20TRADE
Do Infratil and its band of merry investors have FOMO too?
The comparison to fiber companies during the dotcom boom is the right one in my mind. Anyone remember Ziggy and Reach PCCW?Quote:
A team of equity research analysts at Barclays posited that a rush of investments into data centers by cloud-computing service providers appeared to have more in common with “FOMO” — that is, “fear of missing out” — than “Field of Dreams,” a movie famous for the line “if you build it, they will come.”
They highlighted a dichotomy between Wall Street estimates for AI-related capital expenditures and the additional revenue that these investments are supposed to help generate.
While Wall Street expects cloud-service providers to spend an additional $60 billion year-over-year on chips and data centers, they are only expected to reap an additional $20 billion in revenue by 2026.
The Barclays team concluded that, much like companies that laid fiber-optic cable during the dot-com years, the biggest technology firms appear to be overspending on infrastructure.
Of note, the additional capacity produced by projects already under way would be enough to power the existing internet, plus 12,000 new applications with the user base and input demands of ChatGPT, according to Barclays’ numbers. This suggests the plans of hyperscalers to build new data centers are exceeding expected demand.
Wall Street is becoming more skeptical of artificial-intelligence hype helping to power stocks
Maybe. But then they've been in CDC since '16.
Retail offer oversubscribed, despite Snoppy’s efforts here ;)
https://www.nzx.com/announcements/434374
Infratil Limited ("Infratil") is pleased to announce that its non-underwritten retail share offer ("Retail Offer") has closed oversubscribed.
The Retail Offer received strong support from eligible shareholders, with Infratil receiving valid applications totalling approximately NZ$426.2million[1][2][3]. Applications were received from 37,548 eligible shareholders, representing a higher participation level than Infratil's 2023 Retail Offer (27,983 shareholders).
In recognition of the strong support from retail shareholders and the desire to, as far as is practicable, allow shareholders to maintain their proportionate ownership following the equity raising, Infratil has elected to exercise its discretion to accept oversubscriptions. Infratil is accepting an additional NZ$125 million [1][2] of subscriptions, bringing the total amount raised under the Retail Offer to NZ$275 million[1][2].
A total of approximately 27,093,600 new fully paid Infratil ordinary shares will be issued under the Retail Offer at the issue price of NZ$10.15 per share (or A$9.243 per share for ASX Retail Offer applicants [2]), being the price at which shares were issued in the placement announced on Monday, 17 June 2024. Scaling has been applied by reference to each eligible shareholder's pro rata Infratil shareholding on Friday, 14 June 2024 at 9:00pm (NZST) / 7.00pm (AEST) ("Record Date"). Allotment statements will be sent to participating shareholders on Tuesday, 16 July 2024, with refunds of any surplus application amounts to occur on or as soon as possible after that date in accordance with the terms of the Retail Offer Document dated 20 June 2024 ("Retail Offer Document”).
The Retail Offer is part of Infratil's equity raising announced on Monday, 17 June 2024 which also included an underwritten NZ$1,000 million placement of shares. The total amount raised under the equity raising is now NZ$1,275 million[1][2], with proceeds of the equity raising used to fund further investment into data centre operator CDC’s accelerating growth as well as provide more flexibility for growth across Infratil’s global portfolio.
The Retail Offer provided eligible Infratil shareholders, being shareholders having an address in New Zealand or Australia as at 9.00pm (NZST) / 7.00pm (AEST) on the Record Date, with the ability to subscribe for up to a maximum of NZ$150,000 and A$45,000[4], respectively, worth of new shares in Infratil on and in accordance with the terms and conditions in the Retail Offer Document.
Settlement on ASX is expected to occur on Monday, 15 July 2024 and on NZX on Tuesday, 16 July 2024. Allotment of new shares is expected to occur on the NZX and ASX on Tuesday, 16 July. Trading of those shares is expected to commence on NZX on Tuesday, 16 July 2024 and on ASX on Wednesday, 17 July 2024. The new shares to be issued under the Retail Offer will rank equally in all respects with Infratil's existing ordinary shares.
It is valued off the pipeline potential though.
Which as that chart in the Livewire article shows is mostly in Sydney, a much more competitive market than CDC's home market in Canberra.
Those clever people at Goodman plan to just convert their Aus logistical warehouses into data (warehouse) centres, either themselves or by offering ready to build sites complete with power and internet connectivity to the hyperscalers. How do you compete with that?
I imagine you compete based on the usual things, price, expertise, fitness for purpose.
You have to retrofit the buidling, once you've ensured there are no problems with zoning, determined the power supply etc are viable. Then you have to drum up the business. So it's not a fait accompli, though there might be a useful starting point.
Something for the analysts to unpick
For investors that have time then there is compounding returns
For others there is confounding returns
"Brookfield Renewable Just Made a Game-Changing Move. Here's What You Need to Know."
https://finance.yahoo.com/news/brook...103000849.html
https://www.marketscreener.com/quote...EOEN-46633605/
NEOEN $6.5 b offer."Neoen currently has 8.3 gigawatts (GW) of assets in operation or under construction. In addition, it has 20 GW of advanced-stage development projects across Australia, France, and the Nordics."
IFT owns 37% Longroad E,37%valued at $2b ($4b 12 months)
LRE 3.5 GW owned,5.4 GW under contract for O & M & Asset Management Services
https://www.longroadenergy.com/renew...ergy-projects/
Brookfields are no slugs
Every time I start to question my (boring) investment in IFT and the missed opportunities of selling some to buy so called 'cheap' NZ sticks I get a good kicking with reminders from posts like this.
Thanks.
Ift is a real gem, positioned brilliantly and in the right international trends to continue it's growth record. Well, accelerate actually.
With the latest cap raise put to bed, and the plans being implemented then we should be very excited about where IFT could end up.
I cannot remember ever investing in a Kiwi stock like this that is investing billions pa in new ventures and building 'real' assets and revenue.
I agree totally Toddy.Compounding every year for 30 years is no mean feat for any company.
And continually updating the roadmap for future returns.
Patience is pertinant.
Some years SP only increases over 12 particular days/365
Meaning private market debt fund?
and publically traded equity fund Warthog?
Aagh
got it from your earlier post
"One might consider IFT a publicly-traded, infrastructure themed, private equity investor fund."
I am not here to put people off investing in IFT. I am much more interested in letting investors know what it is they are investing in, and letting them make their own investing decisions from there. In particular, in relation to the flagship data centre investment CDC.
I am reasonably happy with my 7th attempt at estimating the present day profitability of CDC data centres (my post 3754). I was probably a little aggressive with estimating the amount of interest being capitalised. (remember any interest that is capitalised reduces the interest bill). That means my lowly $9m NPAT for FY2024 estimate (on EBITDAF of $271m) could be a bit high. BTW these figures say nothing about the profitability of the datacentre concept. IMO these 'low to no' present day profits have been deliberately engineered by Infratil to keep as much owner equity cash in CDC as possible (tax paid is cash lost from the CDC financial model). If IFT wanted CDC to be more profitable right now, all they would have to do is stump up with more equity and repay CDC debt. It is that simple. But instead, it makes more sense in a growing business to make the best use of the 'owner cash' that you can.
All the excitement of the extra $600m from the capital raise earmarked for CDC? From a valuation perspective that money has already gone, being that capital required to support the borrowing program for the 'under construction' and 'future build' programs' of CDC. There will be no further sudden incremental gains from the $600m. It is effectively in the balance sheet, hiding in the improved valuation of the CDC 'associated asset', as committed expenditure already. (It is the discounted cashflow value of the CDC data centre program that 'is being built' / 'will be built' that is reflecting this money in the balance sheet (by way of jumped up asset valuations) right now).
Future business growth assumptions, despite the industry experience and technical expertise of the people preparing them, are just assumptions nevertheless. And the more highly leveraged the datacentre entity being valued is, the more likely the worst case scenario of multi-million dollar datacentre asset write-downs and a capital injection from IFT shareholders to shore up the CDC balance sheet becomes. Note that I am not saying such things are likely. I am just reminding IFT investors that they are a possibility, depending on how the datacentre market develops in real time.
SNOOPY
I was interested in the 4th July Infratil announcement of the revaluation of CDC assets, taking into account the latest confirmed development plans
"Infratil’s 48.25% investment in CDC is now valued at between A$4,159 million to A$4,940 million (with a midpoint of A$4,524 million), up from A$3,783 million to A$4,368 million (with a midpoint of A$4,058 million) at the end of March 2024."
This implies an incremental increase in value $376m-$572m (with a mid point increment of $466m).
The 'incremental future build capacity', which is a reflection of this increased valuation, is as follows:
Site Incremental Capacity Sydney +603MW Melbourne +59MW
Notes from the press release
1/ The 'blended cost of equity' used in the valuation is 11.50% between. This primarily resulting from:
1i/ An increase in gearing as a result of higher forecast debt levels as CDC continues investment in its expanded development pipeline.
1ii/ The increase in gearing is partially offset by a decrease in the asset-specific risk premium, driven by the valuer’s assessment of
the status of CDC’s customer discussions and their overall view of CDC’s ability to deliver on its forecast growth.
2/ The risk-free rate has remained constant at 3.90%.
3/ Cost of Equity 11.50%.
4/ Asset Beta 0.55.
5/ Long term EBITDA Margin 85%
6/ Terminal growth rate 2.5%
7/ From a funding perspective, this valuation reflects an increase of ~A$150 million relative to what was assumed in the full year (March 2024) valuation.
8/ Forecast period 15 years (to 2039).
---------------------------
We also know that
"CDC is currently in advanced negotiations with customers for over 400MW of capacity across multiple sites, expected to come online over the next 4-5 years."
If we regard this as a new capacity development schedule, we could say that 400MW / 4.5 years, equals a realistic incremental development schedule of 89MW per year.
We note that the 'Enterprise Value' increment of CDC (being 'Market Capitalisation'+'Total Debt'-'Cash on Hand'=) +$A964m.
OR 'Market Capitalisation'+'Net Debt' = +$A964m.
Net debt as at 30 June 2024 was A$3,262 million (Snoopy note: I presume this is 'Total Debt' - 'Cash on Hand').
As at the FY2024 balance date: Total Liabilities = A$4,254.1m-A$154.7m=A$4,099.4m (assuming all current assets are cash). This means net debt has gone down a minimum of: A$4,099.4m - A$3,262m = A$837.4m in the incremental 3 month period from EOFY.
There is no strict 'market capitalisation' for CDC, as CDC is not independently listed on any exchange. But there must be an 'agreed capitalised value', something Infratil are calling 'market capitalization', which has therefore gone up in value by at least:
Market Capitalisation Increment - $A837.4m = +$A964m
=> Market Capitalisation Increment = $1,801.4m
SNOOPY
https://finance.yahoo.com/news/brook...103000849.html
Of note:When I say Brookfields are no slugs
"The company believes strategic acquisitions should drive its annual FFO per-share growth rate above 10%"
Whereas IFT grows organically within its own developments & achieves far greater growth rates
Few other company in the renewable sector are growing as fast as IFT
It is quite disappointing when a company uses different terms to muddy the waters for what is ostensibly the same thing. The term 'blended cost of equity' is not one I have heard before. Yet a few lines further down, Infratil just use the phrase 'cost of equity' and say it is the same number. So:
a/ Is 'blended cost of equity' and 'cost of equity' the same thing? OR
b/ Are Infratil talking about the 'Weighted Average Cost of Capital' (WACC), where the cost of capital is 'blended' with the cost of debt to create an overall 'discount rate'?
It looks like the answer is a/. The implication is that, despite CDC only operating data centres, the 'cost of equity' is different between different data centres and so the overall result has to be 'blended'. Very strange. Nevertheless, it would be useful to know what the WACC is for CDC.
WACC Formula and Calculation
WACC=(E/V×Re)+(D/V×Rd×(1−Tc))
where:
E=Market value of the firm’s equity
D=Market value of the firm’s debt
V=E+D
Re=Cost of equity
Rd=Cost of debt
Tc=Corporate tax rate (30% in Australia)
---------------------------
The problem is there is no 'market' information for CDC, as CDC is not listed. So I guess we have to rely on balance sheet information of the same?
The most recent full balance sheet information that we have for CDC is in the Infratil Annual Report for FY2024 on page 80.
Equity= $2,575.6m, Debt $4,245.1m, Total Assets $6,820.7m. There is no information on what quantity of the liabilities is money owed to contractors working on building projects. Likewise there is no information on the quantum of assets that are accounts to be collected from customers. So we just have to make an assumption that the quoted debt to asset position of the company is also indicative of the company's 'bank or equivalent' financed position. Using the numbers in this way gives:
An equity ratio of $2,575.6m/$6,820.7m = 38.8%
A debt ratio of $4,245.1m/$6,820.7m = 62.2%
I would then make an educated guess that the cost of debt is a couple of percentage points above the risk free rate of return: 3.90%+2.00%=5.90%
Putting all of these numbers into the WACC formula above gives me:
WACC=(0.388×11.5%)+(0.622×5.90%×(1−0.3)) = 7.03%
This is how I would do such a calculation anyway. I would be interested to hear if someone has a different opinion on how it should be done!
SNOOPY
This is the Capital Asset Pricing Model formula for calculating the expected return of an asset, given its risk:
ERi = Rf+βi(ERm−Rf)
where:
ERi = expected return of investment
Rf = risk-free rate
βi = beta of the investment
(ERm−Rf) = market risk premium
I am not sure what the 'market risk premium' should be. My feeling is that the total return of the market should be a figure of the order of 6,7,8 percent. There is of course no formal market for CDC shares. So its performance relative to the market 'βi' which we have been given must of necessity have been a guess. Nevertheless, sticking 'all of the numbers we have' into the above equation gives:
ERi = 3.90% + 0.55x(7.0%−3.90%) = 5.61%
That figure seems quite a lot less than the figure of 9-10% that Spark are quoting for their "NPAT / 'Capital Invested' " in their own data centres. But maybe it is just a reflection of the generally lower profitability a data centre experiences as it gets larger and larger (like CDC plans)?
The other unfortunate flow on effect of this calculation for CDC is that it appears the 'expected return' is lower than the WACC. Good luck with building a successful business model on that premise?
SNOOPY
Oh well, I guess this investment is not for you then Snoopy.
Using your methodology, what do you consider a better long term investment than IFT on the ASX, NZX?
It is no secret I have been using the slump in the Spark share price as it crashed down from $5 towards $4 to increase my holding in that company. It is also clear that Spark, with their ten year deals, are making more money up front on their investment in datacentres than CDC is making. As I have said before this doesn't necessarily mean that Spark are better long term operators of datacentres than CDC. It more reflects the fact that CDC are in an extended development phase. And of course datacentres are only a relatively small part of the total Spark operation. But I still want to see the growth numbers that CDC are basing their huge increase in datacentre value on.
I feel a discounted cashflow analysis for CDC coming on. But it is a matter of getting those input numbers right.
The Infratil capital raising investor presentation:
https://infratil.com/news/infratil-a...-equity-raise/
on slide 27 suggests that
"CDC currently generates a blended EBITDAF per ICT MW across all sites and customer segments of over A$2.0m"
Since the July announcement of a larger datacentre asset base of
603MW + 59MW = 662MW
This 'downstream presumes' an incremental increase in EBITDAF of (A$2.0m x 662MW =) A$1,324m per year? But of course, this is only the positive cashflow from operations. We also need to put in the negative cashflow required to build these incremental data centres in the first place (not sure how we do that).
The other thing I would need to do is estimate when this new incremental capacity comes on line, as that determines how many years in the future the 'incremental discounted cashflow' is discounted from. This is the kind of argument that would win me over.
Not reflecting in the historical glow: "We sold some windmills in the middle of the North Island at a good price" and "Made a good few bucks on Zed Energy." "Therefore we are good future forecasters of the demand for datacentres and know how to invest in that space accordingly."
SNOOPY
I agree that if you find a share that suits your investment style, stick with your gut instinct and invest in that. With what is on the table now I am sure that when you add capital gains and dividends, IFT total investor return will outpace Spark over the next 10 years. This can change if some new investment happens that is outside of their current portfolio, but if there is status quo then I am totally confident that IFT will outperform Spark by a long shot over a 10 year period.
I am not saying you are wrong Ggcc. But looking at AR2024 p24 this morning, and the EBITDAF from each Infratil division, I am surprised how dominant 'One NZ' has become (EBITDAF of $545.5m, - 63% of all Infratil EBITDAF). We now know that the second biggest EBITDAF provider, CDC, EBITDAF $140.8m, has supplied most of their 'earnings' via future data centre revaluations. So it is really only 'One NZ' and to a lesser extent Manawa Energy (EBITDAF $74.1m) and Wellington Airport (EBITDAF $70.7m) that are providing the cash that allows Infratil to survive.
Thus it is very clear that Spark and Infratil (via One NZ) are deadly competitors in the same telecommunications space. The big difference being that Infratil takes their 'One NZ' cash profits and reinvests them in various growth prospects outside of telecommunications, whereas Spark takes their profits and gives them straight back to shareholders to 'do what they will' with. So the real comparison for the future is not Infratil verses Spark. It is really Infratil verses Spark PLUS the results of whatever Spark shareholders choose to do with their dividend stream.
If it was a straight fight between 'Spark' and 'One NZ' I would still go for Spark as the provider of the more complete telecommunications packages. I do acknowledge 'One NZs' Jason Paris as a strong CEO though, even though he isn't quite as good as Spark's Jolie Hodson ;). In fact before my recent Spark buy up, my plan was to wait for the 'One NZ' float, then buy Spark on any market weakness of Spark caused by institutions having to rebalance their portfolios into a newly floated 'One NZ' !
SNOOPY
". The consequence of this extreme spending on GPUs has led to a similar rise in data centre demand, with Nvidia’s GPU data centre sales up 409% in the last 12 months. There is no doubting the AI phenomenon, but now we have to power it.
Phase two of this game-changing technology will be all about AI infrastructure and powering the new hardware. Data centre infrastructure and centre managers are the obvious winners"
https://www.livewiremarkets.com/wire...rm=READ%20MORE
"The global generative AI in energy market size was estimated at US$620.11 million in 2022 and it is projected to hit around US$5,338.09 million by 2032, growing at a CAGR of 24.02% during the forecast period from 2023 to 2032"
*MISINFORMATION ALERT*
The following sentence is misleading.
The post above implies the majority or all of EBITDAF comes from revaluations. EBITDAF is before depreciation and revaluations. NPAT includes revaluations.
Fact check from page 2 of the IFT / CDC presentation:
Quote:
EBITDAF represents net earnings before interest, tax, depreciation, amortisation, financial derivative movements, revaluations, gains or losses on the sales of investments, and excludes acquisition and sale related transaction costs and International Portfolio Incentive Fees.
So Snoopy is "spruiking" Spark by posting on the IFT thread?
"I have been using the slump in the Spark share price as it crashed down from $5 towards $4 to increase my holding in that company"
Even though he knows the Spark pays out more in dividends than EPS?
https://www.marketscreener.com/quote...2600/finances/
Hard to say kiora but plugging the WACC value into the ERi {expected return on investment} value for the CAPM formula is also a bit weird. Could be the Covid brain fog. I'm also surprised he stated earnings in the context of EBITDAF includes revaluations when this was laid out correctly in earlier posts.
"Slow down Cowboy"
I admit my wording may be sub-optimal. I contest that it is misinformation though. The point I was trying to make was that the earnings for associates follow different rules to the earnings of subsidiaries, which is why I put the word 'earnings' in quotation marks in my text that you quoted above. If I had meant 'earnings' to be interpreted as EBITDAF then I would have written EBITDAF. I did not do this.
The overlaying problem is you might class that entire table in AR2024 p24 titled 'Proportionate EBITDAF' as 'misinformation'. Because it implies that you can sum that table and get the EBITDAF for Infratil, when in fact this is not true. The 'associate investment(s)' by Infratil, including CDC, cannot be consolidated in this way if accounting rules are followed.
AR2024 Note 6.2 lists equity accounted 'earnings' of CDC as $116.3m. But this number mostly represents capital adjustments to the value of the CDC portfolio. It is not representative of current year CDC revenue. Yet these associate 'earnings' are added to 'operating revenue' from the Infratil subsidiaries in the 'Consolidated Statement of Comprehensive Income'. I am not implying there is anything sinister in this treatment of revenues. This is just how the accounting rules work.
The point is you can decouple EBITDAF and 'revaluations' in a subsidiary. But you cannot decouple EBITDAF and 'revaluations' in an associate investment. It becomes an artificial construct if you are arguing that EBITDAF and revaluations for an associate should be remarked on separately, because the accounting reporting laws do not endorse such 'separate reporting'.
SNOOPY
trump hates wind and what happened increased the odds of him winning
https://www.theguardian.com/us-news/...ng-in-pictures
I wasn't 'spruiking' anything. Toddy asked me a direct question and I answered. There is nothing more to see than that. And the position of the Spark board is that the earnings are on track to support the dividend, which 'market screener' is not telling you. But traditionally most Spark expenditure occurs in the first half, which is why the dividend and earnings for HY2014 appears out of whack.
If you have been following my investment case for Spark, you will know that it does not depend on the current level of dividends continuing anyway.
SNOOPY
Hence the reason I say "Slow down Cowboy". Get the wording right and let's not invent definitions. You may not understand the ramifications of your posts for investors who aren't sufficiently versed in interpreting the intricacies of the AR or the various definitions of 'earnings'.
Would you prefer disinformation? I gave you the benefit of doubt by using "mis". The wording was very misleading.
The context of 'earnings' was EBITDAF given you made no such qualifications in your post other than the single quotes. My interpretation was you were mocking the derivation of earnings and the distinction between 'Earnings Before Interest, Tax, Depreciation etc' and NPAT was not clear in your post.
This is also misinformation. Quote from IFT AR p24:
There is no need to double down and start redefining things or creating strawman arguments. IFT provided the intent for that table and it allows investors to see the underlying performance from each investment relative to each other and last year - one piece of misleading information I can see in that table is comparing full ownership of One NZ to partial ownership. However, Infratil did not imply one could sum these values to get the Infratil EBITDA given a) the quote I provided which gave the intent and a reference to a reconciliation and b) the table on the very next page..!Quote:
Proportionate EBITDAF is intended to show Infratil’s share of the operating earnings of the companies in which it invests. [snip] A reconciliation of Proportionate EBITDAF to net surplus after tax is presented in Infratil’s annual results presentation.
You have made a series of posts and subsequent revisions on the subject of CDC, which have been shown to be incorrect. This is not the way to prove the profitability of Spark's investment in similar ventures. Can I recommend you post about Spark in the Spark thread? And maybe once you have a finalised and informed view on CDC, then present that....rather than learning while you post what can be interpreted as misinformation.
Quote:
Misinformation is “false information that is spread, regardless of intent to mislead.”
Plenty of articles in the Guardian about their new left Government doing a Jacinda in the North Sea and banning oil and gas. Trumps current view is short sighted due to his sponsors in Texas with the $$$.
IFT has been through many different Governments in many countries over the years. You just work with them the best you can and carry on growing the business.
If Trump takes away renewable energy incentives then those that have already built infrastructure will have a competitive advantage.
Interesting times, does Trump listen to his mates like Eion Musk, or does he listen to his oil mates. I'm picking he will listen to both.
Either way, ift will carry on.
The bit in bold you state as a fact is actually a matter of opinion. Your opinion, which you are entitled to. But it is not a definitive fact.
That post 3780 I wrote in just a few minutes. If you read the whole thing it is obvious the primary point of the post was about cash generation. If I had thought about it more, I probably would have defined what I meant by 'earnings', in quotation marks, first up in the first paragraph. The reason I started talking about EBITDAF straight off was because the table I was looking at was listing EBITDAF numbers. I wasn't going to go through each table item, convert each EBITDAF figure to NPAT and then worry about the role one off revaluations might play in NPAT. All these issues, in relation to CDC, have been canvassed on this thread before, over the last few days. And it has become apparent that most of the CDC profit recorded in the CDC books over FY2024, and reported on in the Infratil AR2024 p80, is from one off asset revaluations.
I accept that when I mentioned 'earnings' in quotation marks, some might have seen that as another way of saying EBITDAF. That is why I said I could have worded the post better. However, that is only one way of interpreting what I wrote. It is also equally valid to interpret EBITDAF and 'earnings' as meaning two different things. It seems very clear if you read the whole post that I was talking about the subject of cash generation. And separately it is also clear (though not mentioned in the post 3780) that the mere act of revaluing an asset upwards does not in itself generate cash.
As I said, the syntax of post 3780 could have been better. I accept some could have read it an alternative way and so misinformed themselves. But for those who have been following the discussion of the last few days, I don't believe the post was misinformation.
SNOOPY
If you were to just compare One to Spark, I too would choose Spark, as One is still trying to better their services and that in itself will be a few year struggle, but they will get there. Ift play the long game, I am happy to be part of their journey.
You always make more money selling businesses than running businesses. When IFT businesses are near to fully matured you will IFT flick them off or use them for cashflow.
Has Snoopy driven down the IFT share price today.
Tough day at the office!
The process is called 'iterative optimisation'. Take some information that you do know. make some educated guesses about what you don't know. Put all the inputs into the formula. Crank the handle and see if something sensible comes out. If not, revise your guesses and crank the handle again. Rinse and repeat until you are happy with the numbers you are generating. I am not going to apologise for taking seven iterations to get to a point I am happy with. Particularly when the whole idea of being 'correct' is an illusion anyway. We can't be 'correct' until we have full access to the CDC accounts, which Infratil is under no obligation to supply us. So 'best guess' it is.
Already done in June:
https://www.sharetrader.co.nz/showth...=1#post1058688
https://www.sharetrader.co.nz/showth...=1#post1058788
All sources are open when looking for clues. And certainly looking at the profitability of Spark datacentres offers some clues to the numbers that might be behind CDC. It is called 'cross fertilization of ideas'. If I present information on CDC titled as an 'attenpt' , I don't see why anyone would take such a post as definitive.
SNOOPY
In the many years that I've been here, and with the greatest respect I have for Snoopy's analysis ... especially the Buffet tests, I have never seen him work up a flawed and evolving derogatory scenario, on record, with so many pullbacks and corrections for a competitor of a company that he does hold and has held for a long time.
Covid brain? Who knows, but it's questioning a very long standing confidence in his current and future analysis.
What derogatory scenario? Have I told people to not invest in Infratil? No. Yes I have said that CDC is not making much money from operations. But I have explained the background behind that, I don't have a problem with it, and I don't necessarily see that as a long term negative. I just want to see some of the numbers that make up that lofty CDC valuation. A perfectly reasonable request I would have thought. But some existing shareholders seem to have taken that request as a slap in the face.
Furthermore the fact I hold shares in Spark has nothing to do with the impression that you have where you think I am disparaging Infratil. I would be quite happy to hold both SPK and IFT if I can make my own investment case for IFT stand up. If you think my analysis on CDC is flawed,
https://www.sharetrader.co.nz/showth...=1#post1060215
https://www.sharetrader.co.nz/showth...=1#post1059326
https://www.sharetrader.co.nz/showth...=1#post1059815
then please post your own alternative one, or a least point out where you think I have gone wrong.
SNOOPY
Looking at past performance is one thing but for IFT investors now future earnings and compounding returns are more important
https://infratil.com/for-investors/o...d-performance/
So past peformance was:
A post-tax return of 18.7% a year over 30 years. In contrast, the NZX50 delivered a return of 7.4% a year over the same period.
A post-tax return of 22.0% per year over last 10 years.
So compounding returns have increased over last 10 years
So IFT management are getting
"luckier"?
+/- They are getting better?
+/- The investing environment is improving?
I only want to invest in companies that have compounding returns in the future.
Because then timing the market doesn't matter.
Because time in the market is far more important and I'm only looking to keep owning the shares in the company.
I can set & forget and ignore any noise.
So what will future earnings look like?
I'm picking that
There is a pipline of development prepared
The investment opportunities have rarely been this good
That there is little capital constraint
The investing environment will stay the same for the immediate future.
That the IFT management will be as good if not better than it has been
That investors will get "luckier" in the immediate future
They're emotional, Snoopy. They're here to have their decisions, views and perspectives affirmed, not challenged, questioned or analysed. We saw with the hoax how for 80%+ of people there is basically no critical thinking or independent assessment ability present. They follow the crowd and believe in the wisdom of their cult, and react emotionally when it is called into question.
Disc. hold IFT. :t_up:
Just checked Link Market Services to see how my allocation went - seems they have used an interesting method of scaling. I thought that they might take some oversubscriptions so I applied for 1.33 x my entitlement; received 1.086 x my entitlement. I imagine there is going to be varying results for different holders.