Sometimes brokers upgrade a company's price target because of interesting, market-moving news, but in this case, Morgans has a buy rating on Dalrymple Bay Infrastructure Ltd (ASX: DBI) despite a complete lack of news flow.
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Shares looking cheap
The analyst team at Morgans has published a research note to their clients this week, simply noting that shares in the ports operator have fallen from their peak of $5.43 when the company's results were published in late February to $4.65 when their report was published.
The shares have made up a bit of that loss on Friday morning, trading 5.2% higher at $4.89, but the thesis still holds, with Morgans having a price target of $5.35 on the shares, which also pay a healthy dividend yield of 6.2%.
The Morgans team said of the stock:
We endorse a Buy rating for DBI, with a $5.35 discounted cash flow-based target price and dividend per share guidance of 26.375 cents (paid quarterly) for the 12 months to June 2026 (and a target to grow dividend per share by 3-7% per year over the foreseeable future). We believe DBI may appeal to investors seeking dependable and growing yield and defensive elements for their portfolio. Key risk is a value dilutive capital raising and/or M&A.
Steady as she goes
Having a look at the recently announced full-year profit, it was a solid outcome for the company.
Dalrymple Bay reported terminal infrastructure charge revenue of $307.6 million, up 3.9% on the previous year, and EBITDA of $294.3 million, up 5.2%.
The total dividend payout of 24.625 cents for the year was an 11.9% increase.
Dalrymple Bay Managing Director Michael Riches said of the result:
Dalrymple Bay Infrastructure's FY-25 performance reflects the continued resilience of the business and the consistency of its earnings profile. Financial performance was underpinned by the stability of DBI's take-or-pay contracts, growth in the underlying terminal infrastructure charge and the continued delivery of revenue-enhancement and cost-efficiency initiatives. The December refinancing has improved balance sheet flexibility and reduced funding costs, while preserving substantial debt capacity to fund committed NECAP projects at a lower cost of capital. The refinancing has demonstrated the strong credit profile of DBI and that there are other low cost sources of debt capital open for DBI to access for future refinancings. This should continue to allow DBI to improve its balance sheet, lower interest costs and reduce refinancing risk.
The ASX 200 infrastructure company was valued at $2.32 billion at the close of trade on Thursday.
