They have a $46.00 target. GLTA
Q1/24 RESULTS IN LINE; BUSINESS THE STRONGEST IT HAS EVER BEEN
THE TD COWEN INSIGHT
We anticipate that BIP's Q1/24 results will provide a SLIGHTLY POSITIVE catalyst for the unit price. FFO/unit was as expected and up a solid 8% y/y, supported by a high level of inflation indexation. Despite higher interest rates, BIP believes the business is the strongest it has ever been and highlighted that its organic growth is highly correlated to decarbonization and digitalization.
Event
BIP reported Q1/24. The conference call is at 9:00 a.m. ET. Registration: link. Impact:
SLIGHTLY POSITIVE
Q1/24 Results: FFO/unit of $0.78 was in line with the Street/TDSI and up a solid 8% y/y. Transportation was the major growth driver, reflecting the recent Triton container fleet acquisition, which is performing well above BIP's conservative underwriting assumptions.
Market Backdrop: BIP expects a more balanced environment for transacting during 2024. Credit markets have performed exceptionally well YTD, and activity levels for M&A processes are increasing.
Capital Deployment/Recycling: BIP's investment pipeline remains quite full, but it is being selective and pursuing only those opportunities with the highest risk-adjusted returns. BIP has announced three acquisitions YTD, resulting in ~$500mm of equity deployment, and we would characterize those deals as tuck-ins, which typically offer among the LP's highest M&A returns. BIP also has a large pipeline of early-stage M&A opportunities that it believes could achieve returns above its 12%-15% target range. That pipeline includes deals ranging from asset carve-outs to strategic partnerships, and is concentrated in OECD countries in Asia Pacific, North America, and Europe. Less than four months into the year, BIP has already generated >50% of its $2bln annual capital recycling target.
Corporate Liquidity: BIP ended Q1/24 with ~$2bln of corporate liquidity, which should be supplemented by a further ~$1bln of capital recycling.
- Attractive Entry Point: The units offer a ~6% yield and trade at just under 12x the 2024 consensus EBITDA estimate, which is below the low-end of the historical range of 12.5x-16.7x, and a valuation which we find very attractive relative to the quality/ diversity of BIP's portfolio.