If Tilt Renewables is worth 12.2-times earnings, what does that mean for fellow listed renewables company Infigen Energy?
Macquarie analysts reckon Infigen is trading at a 40 per cent discount to the Tilt Renewables bid price - and not all of it is justified.
The analysts said Infigen would be worth up to 85¢ a share using metrics from Infratil and Mercury's expected offer for Tilt, announced this week.
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"While there are variances between the companies, i.e., proportion of production contracted, average realised price, geographies in operation, we note some key similarities in terms of portfolio size and production," Macquarie told clients on Thursday morning.
"The bid implies an FY18 EV/EBITDA of ~12.2x for TLT. Moreover, the bid price of ~12.2x compares with IFN at ~7x which is a ~40% discount.
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Last updated: Thu Aug 16 2018 - 19:02:38 View full quote
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"We believe some of valuation gap highlights a higher degree of certainty in earnings given a higher portion of contracted earnings.
"On an EV/MW basis the bid implies a value of ~A$1.96/MW which using the same metric would imply a value of ~$0.77-$85ps for IFN. Similarly on an Price/MW basis this implies a value of ~$0.72/share."
Infigen shares last traded at 59¢.
It comes as investors and analysts watch for corporate activity at Infigen following the arrival of Brookfield on the company's share register.
Brookfield took a 9.06 per cent stake in April at 58.5¢ a share.
IFN Price at posting:
58.5¢ Sentiment: Buy Disclosure: Held
