Value ?23 Jun 2014 18:51
My view of the flaw in Infinisis is that, ironically, it is NOT infinite but its assets -especially landfill- have a very finite life. On current EBITDA earning measures it looks OK but this excludes DA (depreciation and amortization) which are not cashflow but are important, in my view, because they capture the fact that company's assets have limited life. In my, non-expert, opinion Full Year EBITDA will be c£130M. But net of maintenance capex (mentioned in prospectus and similar to ops cost) of c£15M and interest of c£45M, INFI is left with c£70M to pay an annual divi of c£55m. Moreover there will be downward pressure on earnings from end-of-life assets and I am concerned that this pressure will be felt on dividends which is the main attraction.