Daily ShareChat: Infratil

By Jenny Ruth

Wednesday 9th December 2009

Greenspark's takeover bid for at least 50.1% of Australia-based Energy Developments will probably succeed, even though Energy Developments' board is unlikely to endorse the bid, says First NZ Capital analyst Rob Bode.

That means Infratil is likely to sell its 32.5% stake at last, realising about $178 million at the current exchange rate. That should boost Infratil's reported earnings for the year ending March 2010 by about $98 million, partly reversing the $114 million write-down in 2009, Bode says.

The sale will put Infratil in a good position it fund its potential acquisition of the Shell New Zealand distribution and retail assets without unduly stressing its balance sheet, he says.

"Infratil shares remain at a hefty discount to valuation, reflecting confusion and uncertainty over the portfolio re-balancing and the potential acquisition" of the Shell assets.

"While in the near-term investment in Infratil is speculative due to potential changes in the portfolio, we retain a constructive view on the share price recovering in the next 12 months," Bode says.

"We think value exists well beyond current levels and we expect Infratil will successfully execute its portfolio re-balancing in this time frame."

Bode values Infratil's shares at $2.15, well above yesterday's $1.65 closing price.

BROKER CALL: First NZ Capital rate Infratil as outperform.

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