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Rating as of

Morningstar’s Analysis

Valuation
Currency in AUD
Is it the right time to buy or sell?
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Is it the right time to buy or sell?
Find out with Morningstar Premium

1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

APA Has Plenty of Opportunities to Invest but not All Will Add Value

Adrian Atkins Senior Equity Analyst

Analyst Note

| Adrian Atkins |

We maintain our AUD 9.80 fair value estimate for narrow-moat APA Group and consider the stock fairly valued, offering a 5.5% partly franked yield with solid growth potential. We expect EBITDA to increase at an average annual rate of 4.4% over the next five years as development projects complete, driving similar growth in distributions to investors. The main negative is that APA's assets are not as long lived as other infrastructure firms. For example, earnings on the Wallumbilla Gladstone Pipeline--a third of group EBITDA--should fall to almost zero when the contract ends in 2036, even if the customer continues using it.

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Company Profile

Business Description

APA Group is Australia's largest gas infrastructure company with an extensive portfolio of transmission pipelines, distribution networks, and storage facilities. It is internally managed and has direct operational control over all assets. It owns minority stakes in a few smaller gas infrastructure companies and manages operations for most of these. The stapled securities comprise a unit in Australian Pipeline Trust and in APT Investment Trust.

Contact
Level 25, 580 George Street
Sydney, NSW, 2000, Australia
T +61 296930000
Sector Utilities
Industry Utilities - Regulated Gas
Most Recent Earnings
Fiscal Year End Jun 30, 2021
Stock Type
Employees 1,600

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