Brookfield Ord Shs Class A T.BN

Alternate Symbol(s): BN | T.BN.PR.C

Financial Services Asset Management

Brookfield Corporation is an owner and operator of real assets. It is focused on compounding capital over the long term to earn attractive total returns for its shareholders. Its operating segments include the asset management business and insurance solutions business. Its operating businesses include Renewable Power and Transition business, which includes the ownership, operation, and development of hydroelectric, wind, utility-scale solar power generating assets and distributed energy and sustainable solutions; Infrastructure business, which includes the ownership, operation and development of utilities, transport, midstream, and data assets; Private Equity business, which is focused on the ownership and operation of business services and industrial operations; Real Estate business , which includes the ownership, operation and development of core and transitional and development investments, and Corporate Activities, which include the investment of cash and financial assets.

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Brookfield Ord Shs Class A

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Post by retiredcfon May 12, 2023 8:37am

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Post# 35444975

TD

Still looking for a double with a US$61.00 target. Remains on their Action Buy List. GLTA

Brookfield Corp.

(BN-N, BN-T) US$31.20 | C$42.11

Q1/23 DE In-line; Dry Powder Offers Significant Optionality

Event

BN reported Q1/23 DE/share of $0.72, in line with the Street/TDSI at $0.71/$0.73.

Impact: NEUTRAL

Asset Manager: Fee-bearing capital of $432bln was up 14% y/y, reflecting $19bln of inflows YTD and ~$100bln over the TTM. BAM sees the potential for another record fundraising year in 2023 and is confident of reaching $1tln of FBC by 2027. BN expects to realize >$500mm of net carried interest during 2023 (inclusive of ~$200mm in Q1/23) vs. our prior estimate of ~$700mm, which is not surprising in light of slowing transaction velocity, and given that BN has the luxury of being patient vs. a forced seller.
Real Estate: BN provided significantly more disclosure regarding its on-balance- sheet real-estate portfolio, which has minimal debt maturing this year, and should not be worth less than zero, as market seems to be implying, because BN finances asset-by-asset on a non-recourse basis with no cross-collateralization. The new metrics include NOI, occupancy, loan-to-value ratios, the remaining lease term, and the discount rates used, which should be supportive of the stock over time.
Insurance Solutions: The insurance business generated DE of $145mm in Q1/23 and remains on track to reach $800mm of annualized earnings by year-end. BN's average investment portfolio yield is 5% vs. liabilities with an average cost of 3%, and the current environment is very conducive to higher yields as the company continues to redeploy the liquid short-term investment portfolio.

TD Investment Conclusion

After subtracting the market value of BN's stakes in BAM/BEP/BIP, the share price is ascribing negative value to the stake in BBU, the real-estate portfolio, the insurance business, and the accumulated but unrealized carried interest balance. BN's group- wide liquidity of $113bln provides considerable firepower to address that discount, and the company could repurchase ~10% of its market cap with ~1 year of free cash flow; however, repurchasing shares has to be weighed against the prospect of opportunistically enhancing the franchise against the current market backdrop. We believe BN's conviction in the intrinsic value of its stock price is evidenced by ~ $750mm of share repurchases over the TTM and ~$100mm of share purchases in the open market by the senior executive team since early-December.