Channel Infrastructure NZ: A Stable Investment in the Energy Sector

In the ever-changing landscape of the energy sector, some companies stand out as reliable and enduring investments. Channel Infrastructure NZ (CHI) is one such company, demonstrating resilience and strong management that makes it an attractive choice for investors seeking stability and consistent growth. This article explores CHI's recent performance, strategic initiatives, and its potential as a long-term investment.

CHI has shown remarkable performance in the first half of 2024, with total throughput up 8% and EBITDA up 10% compared to the previous year. The company's safety track record remains robust, and it has secured a 10-year jet fuel storage contract expected to generate additional revenue. Despite a minor risk of shareholder dilution from follow-on equity offerings, CHI's earnings and revenue growth rates are forecasted at 16.6% and 4.1% per annum, respectively. With a return on equity of 8.7% projected in three years, CHI presents an attractive investment opportunity in the under-owned energy sector.

CHI's focus on safety and asset availability has been a driving force behind its progression as a world-class infrastructure operator. The company's strong safety track record, maintained throughout 2024, is a testament to its dedication to ensuring the well-being of its employees and the environment. This focus on safety has not only enhanced CHI's reputation but has also contributed to its operational efficiency, as evidenced by its 8% increase in total throughput and 10% rise in EBITDA during the first half of 2024. Furthermore, CHI's significant progress in capability resourcing has further bolstered its asset availability, enabling it to secure a 10-year jet fuel storage contract expected to generate an additional $55 million in revenue. This strategic focus on safety and asset availability has positioned CHI as a reliable and efficient infrastructure operator, making it an attractive investment opportunity in the energy sector.

CHI's progress towards becoming a world-class infrastructure operator significantly enhances its competitive position in the New Zealand energy market. CHI's strong safety track record, increased total throughput, and robust EBITDA growth reflect its operational efficiency and reliability. The 10-year jet fuel storage contract, expected to generate ~$55 million in additional revenue, further solidifies CHI's market position. Additionally, CHI's commitment to growth capital expenditure investment of $26 - $30 million across 2024 to 2026 demonstrates its long-term strategy to maintain and improve its infrastructure. This investment, coupled with CHI's progress in capability resourcing and asset availability, positions the company as a leading independent fuel infrastructure provider in New Zealand.
In conclusion, Channel Infrastructure NZ's strong performance, strategic initiatives, and commitment to safety and asset availability make it an attractive investment opportunity in the energy sector. With a balanced portfolio approach, investors can benefit from CHI's stable growth and enduring business model. As CHI continues to advance its operational capabilities and infrastructure quality, shareholders and stakeholders can anticipate increased dividends, stable earnings growth, and a higher return on equity.