Brookfield Renewable Partners Non Voting Units BEP

TD

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Brookfield Renewable Partners L.P.

(BEP-N, BEP.UN-T) US$33.28 | C$42.71

Upgrading to BUY; Valuation Contraction Opens Window Event

We are upgrading our Brookfield Renewable Partners L.P. (BEP) recommendation to BUY from Hold. The rating change reflects the steep BEP unit-price correction since its Q1/21 peak (down 33% versus respective average declines of 30% for Canadian Renewable IPP equities and 12% for international peers). In our view, BEP's valuation has contracted to attractive levels, given its leading global renewable power platform, compelling growth prospects, and a strong funding platform. We have lowered our target price to $41.00 from $44.00, in tandem with the reduction in target prices across our renewable IPP coverage universe,

Impact: NEUTRAL

• BEP's unit price has underperformed several peers year-to-date and has declined 18% since November 1 versus an average declines of 11% for Canadian renewable IPPs and 5% for international comps. We believe that BEP offers investors a unique global platform with operational expertise that is able to support both opportunistic M&A and a growing organic development pipeline.

• BEP's gross development pipeline (mostly prospective) now sits at 36 GW, having doubled from 18 GW in September 2020. We believe that accelerated corporate demand for renewable power plays to BEP's operational, energy marketing, and procurement strengths, leaving it well-positioned to be a partner of choice for enterprises seeking energy-transition solutions at scale.

• BEP targets equity deployment of $1.0 billion-$1.2 billion annually over the next five years. The company does not anticipate that its five-year plan will require issuance of common equity; we believe that it will remain active on up- financings and capital recycling to partly fund growth. BEP's available liquidity totalled $3.3 billion at the end of Q3/21 and is supplemented by co-investing capital from Brookfield-affiliated private funds. Management continues to target 12-15% IRRs for growth initiatives.

  TD Investment Conclusion

  We believe that BEP deserves its valuation premium based on several factors: scale/track record; broad investment opportunity-set; consistent value-accretive initiatives; ability to act on large/complex transactions; operating/procurement expertise; management depth; and a strong funding platform. We believe that BEP is well-positioned for further growth tied to decarbonization and electrification trends