Spark Infrastructure (SKI)

By Jason Fittler

SKI is an infrastructure fund with an objective to invest in regulated utility infrastructure, both within Australia and overseas.

This includes electricity and gas distribution and transmission, regulated water and sewerage assets.

Spark Infrastructure's current portfolio comprises a 49% interest in three regulated electricity distribution companies, ETSA Utilities in South Australia, CitiPower and Powercor in Victoria.

We started buying this company around the $1.05 mark. It is currently trading at $1.54 and has had a good run over the past month.

At the current price, it has a yield 6.5% which is a good return for a solid utilities company.

It is currently paying $0.10 per share with an expectation that this will increase to $0.105 per share in 2012. All dividends are paid from the free cash flow of $0.142 per share on a 80% payout ratio.

Dividend reinvestment has been suspended which is always a good sign.

The net asset backing for the company is $1.64 per share giving further upside to the price.

With no debt due in 2012 and no regulatory resets until 2015 and the gearing level at 75% we continue to hold this company although taking a profit is very tempting. 

For more information on Spark Infrastructure (SKI) please contact us on 07 4771 4577. 

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