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Results: Infigen share price rally sparked by renewables rebound

The Infigen Energy Ltd (ASX: IFN) share price has climbed 5% higher in today’s trade after the Aussie renewables group posted a solid full-year result.

What did Infigen announce this morning?

For the year ended 30 June 2019 (FY19), Infigen reported underlying earnings up 11% on the prior corresponding period (pcp) to $165.3 million, while net revenue also climbed 9% higher to $229.3 million.

However, Infigen posted net profit after tax (NPAT) 10% lower on pcp, albeit with a $9.9 million impairment to development assets during the year.

The biggest revenue driver was renewable energy generation climbing 20% higher to 1,775 gigawatt hours (GWh) with 67% of FY19 generation sold under contracts.

The news gets better for FY20, with Infigen reporting 75% of its FY20 renewable energy generation and 100% of its expected large-scale generation certificates (LGCs) already contracted.

Positively, Infigen reported power purchase agreements (PPA) volumes up 20% on pcp at 489GWh while merchant volumes sold also climbed 6% higher at 716GWh.

The Aussie renewables group said it remains focused on accretive growth following several acquisitions throughout FY19, while continued deleveraging of its balance sheet and returns to shareholders also emerging as strategic priorities throughout the year.

Infigen paid an interim dividend of 1 cent per share (cps) to shareholders, paid out of free cash flow, with its 2H 2019 distribution to be paid in September 2019.

What about Infigen in FY20?

Despite a bumper year for renewable energy generation, Infigen said it expects further volume growth in FY20 with Bodangora wind farm and Kiata wind farm both set to be online for a full 12 months.

Infigen also said net revenue is weighted towards the first half of the year due to higher LGC contract prices, while net operating cash flow is weighted to the back half of the year when the higher-level LGCs are due for cash settlement.

The continued development of the renewable energy market in Australia remains the key to Infigen’s future profitability and share price growth, and, in my view, the latest result shows they remain in a strong position to post further gains in FY20.

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Motley Fool contributor Kenneth 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.

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