APA – Buy

APA is under Algo Engine buy conditions and is a current holding in our ASX 100 model portfolio.

We see price support at $11.00 and reaffirm our “accumulate” rating. 

APA 1H20 results.

APA Group – FY18

APA’s FY18 operating results were ahead of market consensus with underlying profit growth of 6%.

FY19 forecasts suggest low single digit growth with EBITDA guidance in the range of $1.55b to $1.57b.

The ACCC is expected to release a Statement on, or before the 13th September, expressing its preliminary concerns about the take-over by CKI, (offer price$11 per share).

Further price retracement back towards $9.00 creates another buy opportunity here with APA. The stock now trades on a  forward yield of 4.5%


APA – Takeover Update

The CKI consortium has completed its due diligence and has now entered into a binding Implementation Agreement to acquire 100% of APA’s stapled securities for an all cash offer of $11.00 per share.

The offer is still subject to a number of conditions including approval from the ACCC and the FIRB.

APA goes ex div $0.21 on the 28th December.



APA & SKI attract buying interest

Following the recent takeover offer for APA at $11 per share, (subject to FIRB review), we  see a reasonable risk/reward opportunity to buy both APA and SKI.

A soft backdrop for global bond yields should provide downside protection as investors seek out defensive yield opportunities. Added upside exists in APA if the takeover is given the green light by regulators.

APA Group

Spark Infrastructure (SKI)





APA Takeover Offer – 30% Premium

APA received a non-binding takeover offer at $11 per share, implying a
value of almost 15x earnings.

 APA has granted access to due diligence and the offer will remain subject to regulatory approval from FIRB.

With the share price trading below the takeover offer, we’ll be weighing up the arbitrage opportunity in the week ahead.

We feel other stocks within the infrastructure sector will continue to get a boost from takeover interest and medium term support from the bond market’s tepid outlook.

One example we’re attracted to within this theme is Spark Infrastructure.



Yield Names Remain Under Pressure

Yield sensitive names remain under pressure as the bond sell-off in the US continues. As bond prices trade lower, the yield is increasing. Higher yields, make interest rate sensitive names like infrastructure and property trusts less appealing.

The sell-off in domestic names such as APA, GMG, GPT, SGP, TLS, TCL, SYD, WFD & SCG has been significant. With many of these names now trading on yields within 4.5 to 6.5% range.

There’s a case to be made for the above stocks to find support as the outlook for interest rates begin to stabilise.

Chart – US10yr bond yield