APA Group —a powerful growth pipeline

APA has substantial growth opportunities over and above its organic capital expenditure centred on the group’s existing east coast gas grid. These potential opportunities include the Northern Territory pipeline link to the east coast, further pipeline extensions to mines in Western Australia for cheaper power generation, and ownership roles for the various gas pipelines/ infrastructure of the LNG projects in Queensland akin to the recent QCLNG pipeline transaction. The balance sheet is “expansion ready” with net debt/shareholders’ funds of 196% and an interest cover of 2.6x. The accompanying improvement in operating cashflows should drive solid growth in distributions over the coming years. APA is our most preferred infrastructure investment by a considerable margin.