Dalrymple Bay Infrastructure (ASX: DBI) Overview
On 13 June, Dalrymple Bay Infrastructure (DBI) saw an unusual 5.9% drop in its share price after its major shareholder, Brookfield Infrastructure, divested $428 million worth of stock, equating to 23.2% of the company, at a price of $3.72—this reflects a 7.9% discount from its previous closing price.
Brookfield originally acquired the Dalrymple Bay Terminal in 2010 and floated the company on the ASX in late 2020, following a partial sell-off and issuing new shares at $2.57 each. Despite the recent downturn, the company’s fundamentals remain stable, with an increased dividend yield moving from approximately 6.0% to 6.3%, making it more appealing to investors.
Business Model of DBI
DBI runs the Dalrymple Bay Terminal, recognised as the most cost-effective export route for mines based in the Bowen Basin. It services major mining corporations like Peabody Energy, Stanmore Resources, and Whitehaven Coal. The terminal has seen significant growth since its inception, expanding from a capacity of 14.5 million tonnes per annum (Mtpa) in 1983 to its current capability of 85 Mtpa. Importantly, DBI operates on a 99-year lease agreement with the Queensland Government.
Key to understanding DBI’s operations is its profit and loss statement. The company earns its core revenue through Contract Infrastructure Charges (TIC) based on a fee per tonne of coal capacity. Handling revenue aligns with expenses, as DBI passes operating costs directly to its clients. For non-expansion capital expenditures, the company finances these projects and recoups costs through TIC adjustments.
DBI benefits from contracted capacity—84.2 Mtpa annually, of which over 80% consists of metallurgical coal. Despite current low global coal prices hovering around US$180-200 per tonne, mines exporting through DBI continue to report profitability due to their cost-effective positioning in the market.
Financial Growth Projections
Citi analysts project a steady trajectory of growth in DBI’s financials over the coming years:
| Metric | 2023 | 2024 | 2025 | 2026 | 2027 |
|---|---|---|---|---|---|
| Revenue ($m) | 642 | 767 | 832 | 849 | 890 |
| EBITDA ($m) | 261 | 280 | 291 | 301 | 334 |
| Dividends per Share (cents) | 20.8 | 22.0 | 24.0 | 24.9 | 25.9 |
| Yield (%) | 5.5 | 5.8 | 6.3 | 6.6 | 6.8 |
This divestment from Brookfield improves DBI’s free float, potentially allowing it to rise in rankings within the S&P Small Ordinaries and gain inclusion into the ASX 200.
Resilience and Risks
DBI’s earnings rely on long-term take-or-pay agreements, ensuring robust cash flow and protection against fluctuations in coal prices or shipping volumes. The entirety of DBI’s terminal capacity is secured until June 2028 with renewal options, and revenues are further stabilised by annual inflation adjustments and cost-pass-through structures.
Environmental factors or governmental import restrictions are unlikely to influence DBI’s revenue streams due to its fully contracted capacity. The company also maintains strong protections against operational disruptions, allowing it to sustain revenue even in adverse conditions.
Expansion and Future Prospects
The DBT is poised for further development, with the proposed 8X Project, which aims to increase capacity by up to 14.9 Mtpa at an estimated cost of $1.48 billion. Current demand for additional capacity reflects a queue exceeding 30 Mtpa. The expansion project is being carefully managed with input from potential customers who have already committed funding for initial feasibility studies.
In terms of long-term strategy, DBI is investigating new energy product opportunities while ensuring any investments align with its low-risk profile and retain shareholder value. The infrastructure company remains committed to enhancing its existing strengths while exploring avenues for efficient growth in the future.
In conclusion, despite market turbulence, Dalrymple Bay Infrastructure appears to possess a solid operational and financial foundation, supported by long-term client commitments and growth strategies designed to maintain its competitive edge in the exporting of coal and potential new energy products.
