Australia | Oct 03 2025
This story features INFRATIL LIMITED.
For more info SHARE ANALYSIS: IFT
The company is included in ASX200, ASX300 and ALL-ORDS
Infratil outlined ambitious plans at its recent investor day. A subsequent data centre contract win and AUKUS anticipation raised market expectations further.
- Infratil’s share price supported by mid-September investor day and data centre contract Growth prioritised via digital infrastructure and renewables
- Management's ambition is to lift market cap to $20bn from the current $10.51bn
- Potential for AUKUS-related OpenAI contract
By Mark Woodruff
Amidst portfolio rotation into small caps and resources, shares in New Zealand-based infrastructure investor and operator Infratil ((IFT)) –market cap $10bn-plus– managed to buck the trend in September, stimulated by an investor briefing mid-month and the announcement of a significant new data centre contract.
Potentially adding more impetus to the rising share price, an independent valuation is due shortly for the company’s 49.75%-owned CDC Data Centres (CDC), originally known as Canberra Data Centres.
A large share of Infratil’s portfolio is tied to Australia, anchored by CDC. This business is gaining from the Federal Government’s increased backing of digital infrastructure and is progressing a 200MW high-density data centre project located south-east of Perth’s CBD.
The facility is strategically positioned to support AI and security workloads linked to AUKUS defence cooperation, leveraging its secure infrastructure and close proximity to the Henderson Naval Base.
Overall, the investor day underlined a strong portfolio performance and a sharpened strategic focus on digital infrastructure and renewable energy, alongside active capital recycling.
Management reaffirmed FY26 guidance, including lower capex and higher cash flows.
CEO Jason Boyes explained management is prioritising growth in fast-growing digital infrastructure and renewables while simplifying its portfolio, targeting 11-15% annual returns over a rolling 10-year period.
Regarding digital infrastructure, CDC reported surging demand during FY25 (March year-end), driven by cloud and AI workloads. The platform has 15 sites live and seven under construction.
CDC remains on track to double FY25 earnings by FY27, with customer contracting for the remaining capacity nearly complete.
Contract win
Following the investor day, Buy-rated Citi anticipated a near-term CDC contract win and opened a short-term upside view on the Infratil stock price.
Just days later, management at CDC announced a major contract win, securing around 100MW of new capacity and validating Investor Day commentary on AI and cloud-driven growth.
Following the announcement, Jarden has greater confidence in CDC’s accelerating profit momentum. It’s thought hyperscale contract wins highlight the company’s advantage in sovereign-grade credentials, specialised cooling capabilities, and long weighted average lease expiries (WALEs).
This latest contract lifts total contracted capacity to 575MW, up from 372MW of operational capacity in May 2025. Importantly, Citi highlights, CDC has now locked in 95% of the incremental earnings needed to deliver on its goal of doubling EBITDA by FY27 versus FY25.
Progress toward securing CDC’s FY27 targets should lift market confidence and support a narrowing of the discount to reported net asset value (NAV), in Citi’s view.
Infratil’s overall portfolio exceeds NZ$18bn, concentrated in high-growth infrastructure sectors. Data centres and renewables make up more than 80% of assets, accompanied by additional stable cash flow from airports, telecommunications, and healthcare assets.
For further background on Infratil see FNArena’s recent article at https://fnarena.com/index.php/2025/09/10/infratils-growing-undervalued-digital-exposure/
‘Big 3’ assets
Infratil’s largest business exposures are CDC at 40% of book value (NZ$7.2bn), New Zealand telco provider One NZ (telecom and broadband services) at 20% (NZ$3.7bn), and Longroad Energy at 12% (NZ$2.1bn).
Alongside CDC, three other major portfolio companies presented at the Investor Day: US renewable developer Longroad Energy; One NZ, Infratil’s 49%-owned telecommunications business; and Gurin Energy, the Singapore-based Asian renewables platform.
UBS believes there is further growth in Infratil’s net asset value (NAV) via Longroad due to strong demand and tax qualification post 2030, and via One NZ owing to better execution and a refocus by management on return on invested capital (ROIC).
Management’s ambition to lift market capitalisation to $20bn from the current $10.51bn within five years depends on delivery from the ‘Big 3’ assets (CDC, Longroad and One NZ), while also creating room for Asian renewables to contribute more meaningfully to value creation.
UBS comments key assets to support this ambition include Project Vanda (within Gurin), a renewable energy initiative with potential to create up to US$500m in value, along with expansion into new sectors such as transportation and fleets, logistics and automation, and financial systems.
On Longroad, UBS highlights recent Internal Revenue Service (IRS) guidance on the Inflation Reduction Act (IRA) restores project economics through 2030 and beyond, a positive development after 12 months of uncertainty. Potential M&A opportunities are also noted, as smaller developers struggle with the scale of capital required.
Following the September investor day, Macquarie lowered the discount applied to its valuation of Longroad partly because management reaffirmed its 2028 Opco targets of 10GW (operational or under construction) and US$700m of earnings.
Opco, short for operating company, is that part of Longroad which owns and operates renewable assets (solar, wind, storage) over the long term. It generates recurring earnings from contracted power sales, making it a more stable base for valuation.
The development company, or Devco, originates, designs, and sells projects and its earnings are lumpier, depending on development sales.
Despite a challenging economy, the One NZ business is targeting stronger returns on invested capital by driving cost savings through IT transformation and AI initiatives, while also reducing capital intensity, explains Macquarie.
Citi also describes Gurin as a key future growth platform.
Management emphasised Gurin’s scale and potential in Asian renewables at the investor day, citing a team of around 100 people, including 45 based in Singapore. Gurin is active across seven markets including Japan, South Korea, Thailand, Singapore, and Malaysia.
Citi explains the business has 8GW of projects under development and is targeting more than 250GW of opportunities by 2030, with over half focused on OECD Asia and the balance in emerging Asian markets.
Capital recycling
Infratil is actively recycling capital from mature assets to fund its growth strategy.
At the investor day, management announced a strategic review of Qscan, its Australian diagnostic imaging business. Infratil’s 57% stake was last valued at circa NZ$460m.
This move follows the August agreement to sell Infratil’s 50% stake in RetireAustralia (retirement living) for NZ$328m, with the transaction expected to complete by year-end.
Management has signalled a target of roughly NZ$1bn in total divestment proceeds from such portfolio simplification initiatives.
CDC Valuation
Yesterday, Macquarie raised its CDC equity valuation by 5% to $14.9bn (on a 100%-basis), now 10% above the June 2025 independent equity valuation of $13.6bn.
The analyst explains four key sensitivities drive near-term outcomes for CDC: demand growth, the capitalisation rate, margins, and build costs.
Macquarie assumes a 19% compound annual growth rate (CAGR) to 2037, excluding potential AI-training demand, with each 100bps shift moving valuation by around 6%.
Regarding potential AI-training demand, Macquarie first flagged a potential Australian Stargate Global deal in May. Since then, OpenAI has signed agreements with the UAE, Norway, and the UK, while the US and UK AI Safety Institutes have also partnered with OpenAI.
In the broker’s view, these agreements support the strategic value of CDC’s Perth asset, expected to service AUKUS-related demand as Australia remains the only AUKUS nation yet to secure a formal OpenAI partnership.
Outlook
The reaffirmation of FY26 guidance and CDC’s new contract help bolster confidence in Infratil’s near-term outlook.
Citi expects the new contracted capacity to be reflected in a higher CDC valuation when Infratil reports interim results in mid-November. CDC’s upside is considered a key driver of NAV growth for Infratil.
Additionally, the push to expand Infratil’s Australian investor base (aided by Infratil’s ASX200 index inclusion) is expected to improve market visibility and liquidity.
Following the investor day and new CDC contract win, the average target of four daily covered brokers in the FNArena database increased to NZ$14.03 from NZ$13.79.
Outside of daily coverage Jarden maintains its NZ$14.79 target.
All five brokers mentioned have Buy (or equivalent) ratings.
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