TD commentsEvent
TRP's Q2/22 comparable EPS of $1.00 was slightly below our estimate of $1.01, above the recent consensus estimate of $0.97, and below the Q2/21 comparable EPS of $1.07.
Impact: MIXED
Q2/22 Results: Q2/22 results were slightly below our estimates due to various factors, including slightly slower growth in natural gas pipelines than we had been modelling, greater-than-planned outage days at Bruce Power, and increased interest expense. These were partly offset by higher Power contributions, bolstered by increased contributions from marketing activities.
Coastal GasLink Cost Increase: Coastal GasLink (CGL) is now expected to cost $11.2bln, up from the $6.2bln at FID in October 2018. As a result, TRP's 2022E capital expenditure has increased to $8.5bln from $7bln. CGL has settled with LNG Canada about project costs and scope.
DRP Reinstated: To fund TRP's growth program that includes increased project costs following the company's commitment to making an equity contribution of $1.9bln to Coastal GasLink LP, TRP reinstated its DRP plan at a 2% per share discount, and expects to keep it on for four quarters.
Model Updated; Introducing 2024 Estimates: We have updated our model to reflect the quarterly results and rolled out our 2024 forecasts. We expect 2024 results to be driven by continued organic investments in natural gas pipelines and some recovery in liquids pipelines. The updates result in no net change to our C $75.00 target price.
TD Investment Conclusion TC Energy has a strong incumbency in prolific natural-gas-producing regions in North America, combined with access to large markets, in our view. We believe the company's scale, energy-infrastructure expertise, low-risk business model, and financial strength position it well as societies transition to using lower-carbon energy sources over the long term, while ensuring energy security for North America and its global counterpartiess