Trading near its record high, Macquarie thinks this infrastructure play has even further to go

When it comes to infrastructure shares, stability and a long-term focus are often what investors like to see, and Dalrymple Bay Infrastructure Holdings (ASX: DBI) has that in spades.

The company has a 99 year lease over the Dalrymple Bay Terminal in Queensland, which it has expanded in seven expansion plans over the years to a capacity of 84.2 million tonnes of coal exports from the Bowen Basin per annum.

 As the company says on its website:

DBT services mines in the Bowen Basin, a 60,000 square km region in central Queensland that is the world's largest metallurgical coal export region. Metallurgical coal is used for steel production. DBT supports mines in the Bowen Basin to provide a reliable supply of metallurgical coal to steel producers in export markets. DBT is the lowest cost multi-user export pathway for mines located in the central area of the Bowen Basin on average.

Debt refinanced on better terms

The company earlier this week announced it had refinanced $1.07 billion of its debt, using the money to pay off older debt facilities and close some down entirely.

Dalrymple Bay said this week:

The decision to implement the refinancing is part of Dalrymple Bay's proactive approach to managing its debt portfolio. The reduced debt pricing currently available to Dalrymple Bay in the market created the opportunity to refinance the more expensive and less flexible USPP notes.

The company said the refinancing would deliver reduced interest costs of about $75 million out to 2030.

Further share price upside

The team at Macquarie have run the ruler over the new debt package and like what they see, with an outperform rating on Dalrymple Bay shares.

The Macquarie analysts said they calculated the cash flow impact of the refinancing to be about $15 million per year over the next five years, potentially adding 3 cents to the company's dividend.

The analysts had this to say about the company:

We think Dalrymple Bay Infrastructure is a unique investment with dividend growth of 5% and a valuation EV/EBITDA multiple of 13x, which is below comparable port multiples.

Macquarie has a 12-month price target of $5.33 on Dalrymple Bay shares, compared with the closing price of $4.54 on Thursday.

Once dividends are factored in, this would equate to a total shareholder return of 23% over a one year period if that share price were achieved.

Dalrymple Bay was valued at $2.4 billion at the close of trade on Thursday.

The post Trading near its record high, Macquarie thinks this infrastructure play has even further to go appeared first on The Motley Fool Australia.

Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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