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Infratil share price falls after preliminary FY2020 guidance announcement

The Infratil Limited (ASX: IFT) share price has fallen 1.50% on the company’s Infratil 2019 Investor Day and following an update providing softer preliminary guidance for FY20.

What guidance did Infratil provide?

Today’s announcement on Infratil’s Investor Day follows Wednesday’s announcement in which the company downgraded its FY19 guidance for underlying earnings before interest, tax, depreciation, amortisation and other unrealised gains (EBITDAF) to NZ$535 million – NZ$545 million (down from (NZ$580 million – NZ$620 million).

Infratil announced that preliminary EBITDAF guidance from continuing operations is expected to be between NZ$510 million – NZ$540 million, with a breakdown provided below:

  • Trustpower EBITDAF guidance of NZ$205 million – NZ$225 million
  • Tilt EBITDAF guidance of A$122 million – A$129 million
  • CDC’s reported EBITDA including Infratil’s A$52 million share
  • Longroad contribution assumes 3 development project gains together with the Rio Bravo development gain
  • No amounts are included in guidance for NZ Bus or Perth Energy
  • No Incentive Fees are forecast

Overall, the FY20 underlying EBITDAF guidance figure of NZ$525 million represents a 2.8% decline from the forecast NZ$540 million in FY19 and investors have reacted poorly to the news this morning.

Is Infratil in the buy zone?

The Infratil share price is up 14.2% so far this year but has dipped more than 5% since last Thursday’s 52-week high of $4.16 per share due to the recent profitability updates.

While there has been a minor correction of sorts, I still think Infratil might be a little on the expensive side despite the potential for share price support from technical traders at the current valuation.

Australian gas and electricity prices remain elevated from supply-side shocks which have boosted returns for Infratil and fellow energy competitors AGL Energy Ltd (ASX: AGL) and Beach Energy Ltd (ASX: BPT) in 2019.

Given the recent trend of declining results, I think I’d be steering clear of Infratil at the moment and checking out this buy-rated stock in a booming $22 billion industry instead.

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