Brookfield Infrastructure Partners LP BIP.P.B

TD

[retiredcf]

Currently have a US$49.00 target. GLTA

Brookfield Infrastructure Partners L.P.

(BIP-N, BIP.UN-T) US$34.74

Q4/22 FFO/Unit in Line; Strong 2023 Earnings Visibility Event

BIP reported Q4/22 FFO/unit of $0.72, in line with the Street/TDSI at $0.72. The LP also increased its distribution by 6% to $1.53/year, which is as expected by the Street/ TDSI at $1.54/$1.53 and represents an ~4.5% yield. Although the Q4/22 results/ distribution increase were in line, we have characterized the results as SLIGHTLY POSITIVE because we believe that BIP has strong 2023 earnings visibility and is well-positioned to capitalize on a period of greater capital scarcity.

Impact: SLIGHTLY POSITIVE

• Q4/22 Results: FFO/unit increased 11% y/y. Organic growth of ~10% exceeded BIP's 6%-9% target range, reflecting higher-than-normal inflation indexation, and the commissioning of $1bln+ of new capital projects during the TTM. Earnings also benefited from strong market-sensitive revenues in gas storage and a positive net contribution from the asset rotation program, including the February 2022 acquisition of an Australian regulated utility.

• Earnings Visibility: Based on recently closed acquisitions (HomeServe and a large European telecom tower portfolio), the ramp-up of the Heartland facility, and elevated inflation, BIP commented that it has rarely had better growth visibility.

• Strong Liquidity: BIP has $3.4bln of corporate liquidity, which should be enhanced by ~$260mm on the H1/23 closings of the sale of its Indian toll roads and 50% stake in an Australian port. The LP is also progressing several advanced- stage sales processes and recently launched its next round of asset sales, which is expected to attract strong interest in the current macro backdrop and should generate $2bln+ of net proceeds in 2023.

• Record Backlog: BIP has a record capex backlog of $6.3bln, including the Intel partnership, and we see internal capital projects as a lower-risk and highly visible source of near- to medium-term earnings growth.

• Capital Deployment: After investing $2.9bln across five deals in 2022 (~2x its annual target of ~$1.5bln), BIP has replenished its M&A pipeline and is evaluating several corporate carve-outs and a large number of take-private opportunities.

  TD Investment Conclusion

  We believe that BIP's high-quality and well-diversified portfolio of long-life infrastructure assets provides an attractive combination of yield and growth.