Brookfield Infrastructure Partners LP BIP.P.B

Primary Symbol: BIP Alternate Symbol(s): BRIPF | T.BIP.P.B | T.BIP.P.E | T.BIP.P.F | T.BIP.UN | T.BIP.P.A

Utilities Utilities - Diversified

Brookfield Infrastructure Partners L.P. is a global infrastructure company. The Company owns and operates in the utilities, transport, midstream and data sectors across the Americas, Asia Pacific and Europe. The Company’s segments include Utilities, Transport, Midstream, Data and Corporate. The Utilities segment consists of regulated transmission (natural gas and electricity) and commercial and residential distribution (electricity, natural gas, and water connections) operations. The Transport segment comprises infrastructure assets that provide transportation, storage and handling services for merchandise goods, commodities, and passengers. The Midstream segment comprises systems that provide natural gas transmission, gathering and processing, and storage services. The Data segment comprises critical infrastructure servicing customers in the telecommunications, fiber, and data storage sectors. It is also a data center provider.

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Brookfield Infrastructure Partners LP

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Post by retiredcfon Sep 22, 2023 8:59am

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Post# 35648881

TD 2

Maintain their US$50.00 target. GLTA

Brookfield Infrastructure Partners L.P.

(BIP-N, BIP.UN-T) US$30.30

Visibility to Three-year FFO/Unit Growth CAGR of ~12%+

Event

BIP hosted its annual Investor Day in Toronto.

Impact: SLIGHTLY POSITIVE

Differentiated Full-cycle Investment Strategy: BIP is an active capital recycler, selling mature/de-risked assets to fund new, higher-returning investments. The LP has secured/closed ~$2bln of asset sales at strong returns YTD, demonstrating its ability to do so across market cycles, and is targeting a further ~$2bln in 2024. BIP has also deployed/committed ~$2bln to new investments YTD, exceeding its $1.5bln objective, including: one in logistics (Triton), and two in data centers (Data4/Compass Datacenters). The former is a brownfield platform, with a high going-in yield (15%+) and some growth, while the latter two have modest going-in yields (~3-5%) and outsized growth potential, which BIP was able to acquire for value, because market participants were unwilling to pay much for the sizeable capex backlogs in an environment of capital scarcity. BIP's expected Q4/23 FFO/ unit exit run-rate of ~$0.76 (~$3.05 annualized) falls short of the Street/TDSI at $0.82/$0.84, but its consequent visibility to a three-year FFO/unit CAGR of ~12%+ implies upside of ~100bps+ vs. the implied three-year growth CAGR of ~11% based on consensus.
Spotlight on Data: The acquisitions of Data4 and Compass Datacenters fill key geographic gaps for BIP and will give BIP one of the largest global hyperscale data center platforms, when combined with its existing data center investments. BIP expects its current data center FFO run-rate of ~$30mm (FTM) to increase by ~4.5x to $135mm by 2026, as it develops the highly contracted/large-scale growth pipelines acquired (with further upside potential in the uncommitted land- banks). BIP intends to fund the capital backlog (~15-17% IRRs) by monetizing fully operating/contracted data centers (at ~9-12% IRRs), creating a self-funding structure, which has the potential to generate all-in IRRs of 20%+.

TD Investment Conclusion

BIP yields ~5% and is trading at ~11.5x EV/2024E EBITDA (consensus), which is below the low end of the 10-year range (12.5x-16.7x), and a valuation that we consider very attractive for a high-quality/well-diversified portfolio of long-life infrastructure assets, with ~11% FFO/unit CAGR (2012-2022). By owning BIP, investors effectively gain exposure to each active vintage of Brookfield's private infrastructure funds, with the benefit of daily liquidity.