In morning trade today, shares of gas infrastructure business APA Group (ASX: APA) drifted as much as 2% lower despite the release of a positive full year profit result.
In the year to 30 June 2015, APA achieved statutory net profit growth of 63%, to $560 million, and an operating cash flow increase of 30%. EBITDA (earnings before interest, tax, depreciation and amortisation) were $1,269 million.
Normalised profit, which excludes the uplift from the sale of APA's former shareholding in Envestra Limited, was 2% higher at $204 million.
"APA's national footprint of gas infrastructure and operational smarts continue to drive sustainable growth and returns for securityholders," Chairman Len Bleasel AM, said.
APA announced a final distribution of 20.5 cents per security. The final payout takes the full year distribution to 38 cents, up 4.8% over the prior year. The unfranked distribution is payable on 16 September 2015.
During the year, APA raised $1.8 billion in equity and US$3.7 billion of debt to pay for the huge acquisition of the Wallumbilla Gladstone Pipeline (formerly known as Queensland Curtis LNG Pipeline). Mr Bleasel said that the: "Acquisition of strategic assets such as the Wallumbilla Gladstone Pipeline, as well as ongoing organic growth projects, have continued to strengthen the business" .
During the year, APA spent $396.3 million in capital expenditure – $343.1 million of this was spent on 'growth' projects.
"The addition of the Wallumbilla Gladstone Pipeline during the year adds further to our interconnected East Coast Grid," APA Managing Director, Mick McCormack said. "The grid now extends some 7,500 kilometres across eastern Australia, connecting our infrastructure to Gladstone and working with two new global customers."
Mr McCormack said the group's growth was underpinned by a robust balance sheet.
Is it time to buy APA shares?
Looking ahead, APA is forecasting statutory EBITDA of between $1,275 million and $1,310 million. On a continuing business basis, EBITDA is forecast to be between 55% and 60% higher, thanks to an expected US$355 million contribution from the Wallumbilla acquisition. Net interest cost will be up around $500 million to $510 million, and growth in capex is expected between $300 million and $400 million.
Source: APA Group market release.
As can be seen from the table above, the outlook for growth is positive. However, it's important to remember APA did pay a large price for this growth, and investors choosing to buy shares today will be forced to pay an equally high price because a slice of the company doesn't come cheaply.
Therefore, unless you're investing for the ultra-long-term (10 years or more) my advice is keep APA shares on your watchlist only, for now.
