The Motley Fool

APA Group share price rises on 27% interim profit increase

The APA Group  (ASX: APA) share price has risen 0.85% to $9.48 per share at the time of writing after a strong half-year result which saw net profit after tax (NPAT) increase by 27.0%.

The interim results wrap

APA’s total revenue excluding pass-through rose 6.1% to $1.01 billion in 1H19 while earnings before interest, tax, depreciation and amortization (EBITDA) rose 4.3% on prior corresponding period (pcp) to $787.7 million for the half. The biggest EBITDA segments were Queensland (+7.9% to $511.6 million) and Western Australia (+4.9% to $122.7 million) while Victoria & South Australia dragged slightly on the overall EBITDA figure (-3.8% to $68.8 million).

Statutory NPAT rose 27.0% to $157.4 million despite the group’s record capex program of $1.4 billion which management said is nearing completion. The biggest profit driver was the strong EBITDA figure and lower net interest expense which fell 8.8% after management undertook significant refinancing activities throughout 1H19.

The group’s operating cash flow profile remained strong and increased by 1.7% to $157.4 million for the half-year. APA’s low-risk business model continues to pay dividends for the group, with 79.3% of its revenue from capacity charge revenue and revenue diversified across Energy (49.3%), Utilities (23.4%) and Resources (21.3%).

The group’s payout ratio as a percentage of operating cash flow was 53.4% for the half which works out to be a 21.5 cents per share (cps) distribution consisting of the following:

  • APT franked profit distribution: 7.47 cps
  • APT unfranked profit distribution: 2.03 cps
  • APT capital distribution: 6.58 cps
  • APTIT profit distribution: 2.97 cps
  • APTIT capital distribution: 2.45 cps

Foolish takeaway

I thought today was a strong result for APA in meeting estimates, despite a tumultuous year it spent as a potential takeover target for Hong Kong-based CK Infrastructure Holdings. Ultimately, the deal didn’t receive Foreign Investment Review Board (FIRB) approval.

Management has affirmed FY19 EBITDA guidance at the upper end of the guidance range of $1,550-1,575 million. There is still plenty of uncertainty surrounding the business, however, so I wouldn’t be buying at the current share price of $9.48 per share.

If you’re like me and always looking for the next big growth stock, it might be worth taking a look at these top growth shares that have been tipped as market beaters.

OUR #1 dividend pick to grow your wealth in 2019 is revealed for FREE here!

Our top dividend stock pick for 2019 currently boasts a 5.4% dividend yield (fully franked). I believe it’s a perfect fit for a well-diversified, income-focused portfolio.

Even better, this yield comes attached to an attractive and still-growing business which could keep expanding throughout Australia and New Zealand for years to come. With disciplined management, and a long track record of building wealth for shareholders, this company is a serious candidate for any income-minded investor’s portfolio.

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

Motley Fool contributor Lachlan Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!