I agree with that.
I check IFT occasionally but it's one of those companies that requires very little maintenance.
Fundamentally I see three core industries within the business portfolio that we hold considerable interest in:
1. Renewables
2. Data Centres
3. Vodafone - Telecommunications
Renewables
We have barely seen an investment push into renewable electricity generation. 24 months or so ago we saw a lithium hype off the back of Tesla pushing market competitors to accelerate battery and EV technology in order to remain competitive. Consequently, the investor enthusiasm has dissipated since then because it became apparent it was going to take until 2030 to see any form of substantial returns.
Larger companies are now beginning to take notice and money is moving in slowly. Wesfarmers acquires KDR lithium for example last year.
Today we saw the takeover offer for IFN. Large conglomerates with huge financial capacity are beginning to take positions with a patient approach. Government investments and initiatives are still lacking, and that's why I believe there is no interest in renewables as of yet. Its not affordable for smaller companies to develop projects of scale. IFN for example, have a look at how much debt they had to carry.
TLT (in which IFT holds 62.25% of the shares on issue) appears to be more a developer and seller for the time being. At present this might be the best way to go in order to achieve financial viability.
Over the long to medium term however, renewable energy will become a cheaper alternative for household users, as government support helps cut costs for construction and development (offering grants for example) thus driving customers away from coal power plants as more smaller competitors enter the market. Where TLT will benefit from this is because they'll already have plenty of expertise and some strategic/essential assets in the portfolio with demographic diversity - one of the most important risk factors to consider in the renewable energy industry.
Data Centres
As the world continues its rapid acceleration onto online services, there will ultimately be an ever increasing demand for secure data centres such as CDC (IFT has a 49% stake)
I was reading an article on AFR recently (I'll see if I can find the link for those who have a subscription) but it basically discussed how the federal government requires more secure data storage facilities, however was reluctant to give more business to CDC as it considered it a diversification risk if CDC went into liquidation. On the other hand the only competitor was a Chinese provide which the government refused to do business with over national security concerns.
Yes it sucks CDC is now considered a risk, but ultimately it paints the picture that demand is increasing and supply is stagnant. Not only will that increase profits for CDC it also leaves the ball in their court. They're in a duopoly environment at present, and I still think in my opinion (not disclosed by IFT or the federal government) that CDC Data Centres more than likely got the additional federal contracts because they were the only reliable provider.
The most recent announcement stated that CDC was moving into New Zealand and at the latest shareholder briefing, Marko disclosed that IFT is already having negotiations with potential customers to use the service upon completion of construction.
It appears CDC is one of a kind, and will ultimately have a head start in the industry. An industry that is still yet to flourish. Ultimately, this will give CDC a competitive advantage as they'll have large customer quantities and consequently greater financial capabilities to remain competitive if and when other smaller business enter the industry.
Vodafone
Yeah nah, not a fan of the acquisition due to high levels of competition. So far it's alright, so I'll give the management team a chance to see what they can do.
Just my 2c on IFT but a considerably sound investment with great future growth prospect. All the other smaller investments on the side such as Wellington Airport and Retire Australia just add to the defensive nature of the organisation.
Cheers,
Dalto24
(20min delay)