IFT - Infratil

[Ggcc]

https://www.nzherald.co.nz/business/...G5ZRSQXM56OJI/

Just regarding data centres

[Snoopy]

I am not sure about the 'geo connectivity' advantage point. Is there a high-speed cable connecting Silverdale and Hobsonville? Given they are both in the same broad power supply district, I am unsure of what benefits such a cable might have.

Further to this, I see from slide 28 there is 'dark fibre connectivity' between Auckland and Sydney. My understanding of dark fibre is that it is up to the customer to put their own equipment on either end of the 'dark fibre' so that they can 'light it up' for their own purposes. My take on Slide 28 is that the dark fibre is actually the Southern Cross Cable and does not refer to anything owned by CDC. Happy to be corrected if I have read this wrongly.

SNOOPY

[Bjauck]

https://www.nzherald.co.nz/business/...G5ZRSQXM56OJI/

Just regarding data centres

What with Tiwai Aluminium deals, the power companies should be a good investment? We just need to hope the wind keeps on gusting too.

[Bjauck]

As it is all about the increase data storage for AI. This is what the AI app on my phone came up with:

CDC Data Centres likely have a competitive advantage due to several factors:


1. **Strategic Location**: They have data centers in key locations across Australia and New Zealand, providing low latency and regional coverage to their clients.


2. **Security and Compliance**: They focus on high-security standards, appealing to government and enterprise clients that require stringent data protection and regulatory compliance.


3. **Scalability and Reliability**: CDC Data Centres offer scalable solutions with high reliability and uptime, which are critical for businesses that depend on continuous data access and operations.


4. **Sustainability**: Their commitment to sustainability, including energy-efficient operations and the use of renewable energy sources, aligns with the increasing corporate emphasis on environmental responsibility.


5. **Client Focus**: They provide tailored solutions and high levels of customer service, fostering strong relationships and client loyalty.


These factors collectively contribute to CDC Data Centres' competitive edge in the data center market.

[mike2020]

I think 15% annual return had been a long-standing aim.

From the capital raising “presentation”: Infratil continues to target portfolio returns of 11-15% per annum (after fees) over a 10-year period and has achieved a total shareholder return of 18.7% since its inception in 1994.

There are certainly lots of photos, pie charts and colourful graphs with arrows pointing upwards! British Airport investments a distant memory?

It was the spiral graphs they liked most and I felt like I needed more time to either grasp it or maybe find the hidden image.

[CrustyPlums]

Yes that will be it. They don't own an undersea cable. They could have capacity on SX, TGA or Hawaiki cable systems. All have a path between NZ and AU.

Oops sorry, I didn't add the quote from when Snoopy mentioned this a few posts back

[winner69]

Are these data centres power hungry and dependent on surety of supply?

Just that 0z seemed exposed to power generation shortfall from not enough gas production at the moment and NZ power supply always seems at risk.

Is this a risk to IFT operations?

Or do they just build their own generators and become self reliant?

[Snoopy]

Snoopy IFT target overall growth at 18% p.a. if I recall from their roadshow. Either that or they have achieved it. I might have been distracted by some very hypnotic graphs.

Slide 25 is showing a total shareholder return of 18.7% per year since inception. As the company gets bigger the same percentage increase per year gets harder to achieve. Yet over the last five years, the company has achieved a total shareholder return of 24.6% per annum, which is incredible. The slight downside to this is that most of these returns have been from independent valuations of existing business units, rather than sales 'at market'. And valuations have assumptions, like growth rate discount rate etc. etc. . I am not wanting to cast aspersions on the valuers here, who I am sure have done a thoroughly professional job. But to better understand this valuation process, the latest annual report makes interesting reading

From AR2024 p34:
"Infratil’s investment in CDC is now valued between A$3.8 billion to A$4.4 billion, up from A$3.1 billion to A$3.7 billion 12 months earlier. This valuation increase reflects the significant additional demand and future development pipeline added over the course of the year, somewhat offset by an increase in the required return to take account of the increased risk profile associated with developing at scale. The independent valuation assumes 1,220MW of total built capacity, up from 585MW 12 months earlier. This
consists of 268MW operating capacity, 416MW under construction and 536MW classified as future builds."

I read that as the total current pipeline of data centre construction for some years into the future, being already priced into today's returns. I thought it interesting that the valuers even admit that their valuation is based on the 'build it and customers will come' business scenario, (when talking about the extra risks of developing at scale).

So am I saying that this 'return' Infratil shareholders have had these last few years is all BS? No, I am not saying that. But I do question the ability of valuers to realistically value a data centre portfolio when the total data centre capacity from all market players to come up for commissioning in the near term will increase total market data centre capacity by 500%.

SNOOPY

[Snoopy]

I think 15% annual return had been a long-standing aim.

From the capital raising “presentation”: Infratil continues to target portfolio returns of 11-15% per annum (after fees) over a 10-year period and has achieved a total shareholder return of 18.7% since its inception in 1994.

There are certainly lots of photos, pie charts and colourful graphs with arrows pointing upwards! British Airport investments a distant memory?

I think with hindsight we can forgive the European Airport fiasco. Infratil was coming off a very rewarding period of investing in Wellington Airport, which I recall some 20-25 years ago was known for having more flight movements than Auckland (albeit not more passengers as on average the planes using Wellington Airport were smaller.) With the growth in international tourism, I am not sure if that is still true today. But Wellington remains a 'busy little airport' nevertheless.

So I can see where the interest of investing in other 'secondary airports' came from. But as it turned out, those European Airports that Infratil chose to invest in did not have the same 'essential hub' characteristics that Wellington Airport has. We pay business people to take risks, and sometimes those risks do not pay off. That's business. And as long as management learn from their mistakes, I would be prepared to forgive them.

SNOOPY

[Bjauck]

I think with hindsight we can forgive the European Airport fiasco. Infratil was coming off a very rewarding period of investing in Wellington Airport, which I recall some 20-25 years ago was known for having more flight movements than Auckland (albeit not more passengers as on average the planes using Wellington Airport were smaller.) With the growth in international tourism, I am not sure if that is still true today. But Wellington remains a 'busy; little airport' nevertheless.

So I can see where the interest of investing in other 'secondary airports' came from. But as it turned out, those European Airports that Infratil chose to invest in did not have the same 'essential hub' characteristics that Wellington Airport has. We pay business people to take risks, and sometimes those risks do not pay off. That's business. And as long as management learn from their mistakes, I would be prepared to forgive them.

SNOOPY

Definitely Forgiven - but not forgotten! The global credit crunch did not help passenger numbers.

I think Ardmore has more plane and helicopter flight movements than Mangere too. Planes smaller and older though. A fair amount of new building there too. It does help to have pivotal or unique characteristics.