IFN Valuation, page-2

Further to my last post, let's remind ourselves why $1.20 was being talked about in the forums as a fair valuation for JUST the operating assets. Let's look at P/E ratio valuations for the earnings from IFN's wind farms.

In June Origin sold the Cullerin Wind farm (in NSW) for  $72 million which represented an 11.6 x FY17 EBITDA multiple:

https://www.originenergy.com.au/abo...nounces-sale-of-cullerin-range-wind-farm.html

IFN FY16 EBITDA was $120.2 million. At 11.6x = $1,394 Enterprise Value.

Subtract net debt $595 m = $799 m net equity.

Divide by 772.5 million shares = $1.03 per share (+ development pipeline 18c - 36c per share)

However, IFN FY17 EBITDA is expected to be $130 million (see bottom of pg2: http://s3-ap-southeast-2.amazonaws..../25072640/16_08_29-FY16-Full-Year-Results.pdf)

So, $130 m * 11.6 = $1,508 m
- $595 m = $913 m
/ 772.5 m shares = $1.18 per share (+ development pipeline 18c - 36c per share)

I personally think that the FY17 EBITDA will be higher. LGC pricing remains very strong, better than anybody could've expected half a year ago when FY17 projections were being considered, and this forms a significant part of IFN's earnings.