The APA Group (ASX: APA) share price has risen 0.85% to $9.48 per share at the time of writing after a strong half-year result which saw net profit after tax (NPAT) increase by 27.0%.
The interim results wrap
APA's total revenue excluding pass-through rose 6.1% to $1.01 billion in 1H19 while earnings before interest, tax, depreciation and amortization (EBITDA) rose 4.3% on prior corresponding period (pcp) to $787.7 million for the half. The biggest EBITDA segments were Queensland (+7.9% to $511.6 million) and Western Australia (+4.9% to $122.7 million) while Victoria & South Australia dragged slightly on the overall EBITDA figure (-3.8% to $68.8 million).
Statutory NPAT rose 27.0% to $157.4 million despite the group's record capex program of $1.4 billion which management said is nearing completion. The biggest profit driver was the strong EBITDA figure and lower net interest expense which fell 8.8% after management undertook significant refinancing activities throughout 1H19.
The group's operating cash flow profile remained strong and increased by 1.7% to $157.4 million for the half-year. APA's low-risk business model continues to pay dividends for the group, with 79.3% of its revenue from capacity charge revenue and revenue diversified across Energy (49.3%), Utilities (23.4%) and Resources (21.3%).
The group's payout ratio as a percentage of operating cash flow was 53.4% for the half which works out to be a 21.5 cents per share (cps) distribution consisting of the following:
- APT franked profit distribution: 7.47 cps
- APT unfranked profit distribution: 2.03 cps
- APT capital distribution: 6.58 cps
- APTIT profit distribution: 2.97 cps
- APTIT capital distribution: 2.45 cps
Foolish takeaway
I thought today was a strong result for APA in meeting estimates, despite a tumultuous year it spent as a potential takeover target for Hong Kong-based CK Infrastructure Holdings. Ultimately, the deal didn't receive Foreign Investment Review Board (FIRB) approval.
Management has affirmed FY19 EBITDA guidance at the upper end of the guidance range of $1,550-1,575 million. There is still plenty of uncertainty surrounding the business, however, so I wouldn't be buying at the current share price of $9.48 per share.
If you're like me and always looking for the next big growth stock, it might be worth taking a look at these top growth shares that have been tipped as market beaters.
