Is the APA Group (ASX: APA) share price a buy for income after the release of its FY19 result? The APA share price rose by 3% today.
APA Group listed on the ASX in 2000 with just six employees and has gone on to become one of Australia’s leading energy infrastructure businesses.
Today, APA has 1,800 employees, 15,400km of pipelines and a 28,900km distribution network. APA is among the largest companies on the ASX with a market capitalisation of almost $13 billion.
APA Pipes In Profit Growth For FY19
The energy infrastructure business announced that its total revenue increased by 4.6% to just over $2 billion.
The revenue increase was mostly from full and part-year contributions from new assets commissioned throughout FY18 and FY19, with ongoing benefit from CPI inflation escalation in the majority of customers’ contracts and favourable exchange rate changes in relation to revenues received from the Wallumbilla Gladstone Pipeline contracts.
APA Group’s EBITDA (click here to learn what EBITDA means) grew by 3.6% to $1.57 billion and net profit after tax (NPAT) grew by 8.8% to $288 million. However, operating cash flow dropped 1.9% to $1.01 billion.
APA said that between FY17 and FY19 it has seen significant (organic) additions to APA’s portfolio including 260 km of new pipelines built and more than 300 MW of new power generation, including 275 MW of renewable generation capability installed.
During the year APA was subject to a takeover bid by China’s CK Infrastructure Holdings.
APA Distribution
APA has declared a final distribution of 25.5 cents per share, increasing the total FY19 distribution by 4.4% to 47 cents per share. This means the current distribution yield on offer is 4.2%.
Is The APA Share Price?
APA expects that FY20 EBITDA could be between $1.66 billion to $1.69 billion, with net interest costs of $505 million to $515 million. EBITDA growth is expected to be between 5.7% to 7.6%.
The FY20 distribution is expected to be 50 cents per share, an increase of 6.4%, meaning a forward distribution yield of 4.5%. This is a decent yield, particularly in light of the very low interest rates we are currently facing.
I like the growing portfolio of renewable energy assets that APA Group is involved in as well. APA could be a defensive share to consider, along with the reliable businesses in the free report below.
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