Australia | May 28 2026
This story features INFRATIL LIMITED, and other companies.
For more info SHARE ANALYSIS: IFT
The company is included in ASX200, ASX300 and ALL-ORDS
A strategic simplification of Infratil’s corporate structure is paving the way for stronger growth from CDC and Longroad Energy’s renewables platform amid rising AI demand.
- CDC (data centres) is Infratil’s dominant growth engine
- Longroad Energy positioned to leverage AI-driven power demand
- Portfolio simplification sharpens focus on core infrastructure assets
- Analyst see upside from strong AI demand and narrowing NAV discount
By Danielle Ecuyer
NZ-headquartered infrastructure investment company Infratil ((IFT)) has a diverse portfolio spanning Digital Infrastructure (Canberra Data Centres or CDC, One NZ, Kao Data and UK data centres), Renewables (Longroad Energy, Gurin Energy and Contact Energy), Healthcare, and Airports (Wellington Airport).
The portfolio, prior to ongoing restructuring, is overweight growth infrastructure, with 40% in data centres, 20% in mobile and higher-risk areas like global renewables.
Arguably, Infratil is positioned to leverage a swathe of infrastructure spending across megatrends shaping global economies, from AI (data centres) to growing energy demand.
Morgans explains management targets 11%-15% post-fee returns and has achieved 18.4% since inception in 1994. Management is aligned with NZ-based Morrison & Co, a well-recognised global infrastructure manager.
More under the surface of FY26 result
The market sold off the stock by -6% on the day of the FY26 earnings announcement. UBS reckons the response was likely due to disappointment no further contract signings were announced from CDC.
But, as outlined by Morgans, the result itself was robust, with net proportionate earnings (EBITDA) from ongoing operations up 11% y/y, beating expectations by 4%.
The portfolio asset value rose 13% to NZ$20.6bn, in line with expectations.
Other brokers view the release as broadly in line, albeit at the upper end of the guidance range.
CDC is lauded as the standout. This asset (49.75% owned) has become the powerhouse for Infratil, generating AU$393m in FY26 earnings (EBITDA).
Morgans expects CDC can generate around AU$700m in FY27 and over AU$1bn in FY28. The metrics quoted represent 100% of CDC in AUD, while Infratil owns slightly less than half and reports in NZD.
While the market may have snubbed the FY26 results due to a lack of new contract wins, it is remiss not to remember prior to the earnings release CDC had announced what analysts described as a “massive” 555MW contract win, not reflected in FY26 numbers.
The contract is the largest data centre contract signed in Australia to date and represents 40% of the country’s existing operating capacity.
As highlighted at the Macquarie Conference, management explained Australia is well positioned for US hyperscalers looking to serve growing international demand as part of the Five Eyes Security Council and AUKUS Treaty.
As observed by Citi, the agreement takes CDC’s contracted capacity to over 1GW. The customer is described as a US-based hyperscaler signing a 10-year agreement with renewal options of up to 20 years. Capacity is expected to come on stream over FY28-FY29.
From a funding perspective, debt is expected to be employed, with no equity raising. Citi emphasised management’s stance no further equity will be needed to fund capex at the FY26 results.
Morgan Stanley emphasised the positive thesis on Infratil is based on a belief consensus forecasts underestimate structural demand for cloud services, compute power and AI models over the next one to three years.
As an aside, which speaks to Morgan Stanley’s point, the latest media speculation suggests Anthropic CEO and co-founder Dario Amodei has been conducting a beauty parade to select an Australian-based data centre provider, with the intention of buying 300MW-500MW of compute capacity to train its LLMs.
Reportedly, Anthropic is also looking at investing in renewable energy.
CDC and Longroad represent upside potential
Macquarie detailed CDC contracting discussions are continuing well for signings in 1H27.
The current pipeline is around 2.9GW to the mid-2030s, excluding further medium and large-scale deployments. UBS concurs, with both brokers seeing an additional circa 1GW over the medium term as likely.
Morgans points to the current 1GW-plus of contracted capacity generating around AU$2bn in annualised earnings (EBITDA) by FY30 based only on signed contracts.
“It has upside,” the analyst exclaims.
Dissecting the results further, UBS observes lower corporate costs offset small misses from CDC and One NZ. Morgans sees data centre strength offsetting weakness in NZ assets and mixed outcomes from renewables generation and storage assets across the US, Europe and Asia.
Digging deeper, Longroad Energy’s (US renewables business) FY26 earnings (EBITDA) came in on a proportionate basis 7% above Macquarie’s expectations and 1% higher than consensus. Longroad represents around 10% of the gross asset valuation.
Guidance at the midpoint implied a slight rise of 5% for FY27 earnings (EBITDA) and 170% growth above FY26 as construction is completed towards the end of FY27 and into FY28.
Morgans sees Longroad as well positioned to double earnings (EBITDA) over the next three years, highlighting the cadence of capacity has been upgraded to around 2GW from circa 1.5GW per annum prior to the result.
In 2025, there was 3.5GW of operating capacity and this is now expected to reach 9GW by 2029.
Citi detailed how Longroad is looking to become part of the data centre expansion thematic, with more than 4GW of grid-connected data centres co-located with Longroad solar-storage projects.
UBS agrees the outlook for Longroad is improving, with solar demand greater than supply in 2027 and beyond, while battery supply exceeding demand allows for lower-cost inputs.
Equally, UBS views the new data centre strategy leveraging property and interconnection queue advantages as an added positive.
All this growth comes at a cost, with Infratil agreeing to a US$300m equity injection over the next two years to support the build-out. Longroad is also acquiring a 2.8GW solar/battery project.
Macquarie comments CDC could be a possible partner.
Gurin Energy, which is awaiting approval for Project Vanda, is planning to export power from Indonesia to Singapore and is awaiting key sign-off from both governments, Morgans notes. Gurin represents 3% of Macquarie’s gross asset valuation of Infratil.
Galileo is more challenged, with management stating renewable development outside the US has become more difficult.
“Power demand and prices haven’t risen enough to offset higher project delivery and platform costs, as the complexity and duration of developments has increased in many of the markets where we operate. This has seen returns compress.”
Galileo’s difficult year saw a “strategy reset in 2H26 to position Galileo as an independent power producer and take projects through construction and operations”, as noted by Morgans, with Infratil’s share at EU23.3m.
Brokers congregate around positive strategy update
Analysts were most enthralled by management’s strategy. As outlined by Citi, as the third growth pillar after CDC and Longroad, management is seeking to simplify the business and targeting the divestment of a further NZ$1bn in assets, after the previously highlighted NZ$1bn program, of which NZ$600m has been completed.
By “pruning smaller, lower-return generating businesses (like radiology)”, the Citi analyst stresses Infratil can concentrate on the core businesses of data centres and renewable energy.
Macquarie expects the portfolio company count to fall to 10 from 13 currently. Simplification is also anticipated to narrow the price-to-net asset value discount over time.
Regarding proportionate capex, this advanced 17% in FY26 and is forecast to rise 57% in FY27, above Morgans’ expectations.
Macquarie points to slightly higher parent net debt of NZ$3.2bn.
Assessing Infratil’s upside potential
Citi envisages ongoing upside to Infratil’s net asset value and, like Macquarie, flags a narrowing of the discount to asset valuation as offering further share price upside.
Morgans raises FY27/FY28 proportionate earnings (EBITDA) forecasts by 18% and 26%, respectively. FY28 estimates largely reflect the 550MW contract win for CDC.
Macquarie tweaks EPS estimates and has a post-research restriction net asset value (target price) of NZ$17.13. CDC represents 55% of gross asset valuation.
UBS explains CDC’s implied valuation of NZ$10bn represents a discount to NextDC ((NXT)) of around -20%. That discount has been as much as circa -30% in prior years. Given current growth rates, the discount could narrow to -10% or less, this broker suggests.
Compared to the AirTrunk sale in 2024, UBS’ EV/contracted EBITDA valuation is 18x, or a -15% discount.
The target price is raised to NZ$17.25 from NZ$16.50. CDC now represents 42% of Infratil’s net asset value. UBS believes CDC is executing at scale and becoming a leading global data centre operator.
Morgans explains the CDC stake was valued at NZ$8.9bn in FY26 before the 550MW contract win. This analyst estimates Infratil’s net asset value at NZ$16.26 for March-end FY26, NZ$18.66 for March-end FY27 and NZ$21.84 for March-end FY28.
Morgans’ target price is raised to AU$13.80 from AU$11.30, based on a -10% discount to NAV. Morgans notes management’s aim to develop high-quality growth assets and target 11%-15% p.a. post-fee returns could result in a NAV uplift of 70%-100% over the next five years.
Citi is equally upbeat following management’s earnings call and remains confident of further upside to NAV and the share price. A Buy rating is retained. Target price is lifted to NZ$18.59 from NZ$15.70 or AU$15.18 from AU$12.87.
Non-daily monitored broker Jarden has lowered its target price to NZ$17.15 from NZ$17.24 due to higher net debt and more shares on issue. A Buy rating is retained.
Find out why FNArena subscribers like the service so much: “Your Feedback (Thank You)” – Warning this story contains unashamedly positive feedback on the service provided.
FNArena is proud about its track record and past achievements: Ten Years On
Click to view our Glossary of Financial Terms
CHARTS
For more info SHARE ANALYSIS: IFT - INFRATIL LIMITED
For more info SHARE ANALYSIS: NXT - NEXTDC LIMITED