UBS: Fast Take: Infratil New Zealand "IFT has sold a 5% stake in Contact Ene..."

Research evidence excerpt

UBS: Fast Take: Infratil New Zealand "IFT has sold a 5% stake in Contact Ene..."

Forecast returns

Forecast price appreciation 8.1%

Forecast dividend yield 1.6%

Forecast stock return 9.8%

Market return assumption 8.0%

Forecast excess return 1.7%

Company Description

Infratil is an active investor primarily focused on the infrastructure sector. Historically,

investments were focused on the electricity, ports and airports sectors, where it was able to

exploit its industry expertise. More recently, this has evolved into telecommunications with an

investment in Vodafone NZ, data centers with its stake in CDC, and social infrastructure with

investments in retirement villages and residential aged care facilities. It has a preference for

controlling stakes where it can wield management and strategic influence. The company is

managed by merchant bankers Morrison & Co.

Valuation Method and Risk Statement

We use market price for CEN. Our valuations for the key unlisted investments including CDC,

One NZ, Wellington Airport are based on a combination of DCF, SOTP and DDM

methodologies. Our IFT Price Target remains at a 2.5% discount to our forward NAV estimate.

Infratil holds investments in several different sectors, including airports, telecommunications,

datacentres, radiology, electricity generation, and renewables. It is therefore subject to the

risks associated with each of these sectors. Specifically with regard to airports, these include

declines in air passenger volumes, declines in air-freight volumes, and regulatory risk.

Electricity risks include greater regulation and exposure to wholesale prices. We believe

regulatory risk is low in NZ. Telecoms faces strong competitive threats and regulatory

intervention but NZ has a rational three player mobile market.