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Incitec Pivot Ltd T.IPL


Primary Symbol: ICPVF

Incitec Pivot Limited is an Australia-based manufacturer and supplier to the resources and agricultural sectors. Its segments include Asia Pacific and Americas. Asia Pacific segment includes Fertilisers Asia Pacific (Fertilisers APAC) and Dyno Nobel Asia Pacific (DNAP). Fertilisers APAC manufactures and sells fertilizers in Eastern Australia and the export market. It also manufactures, imports and sells industrial chemicals to the agricultural sector and other specialist industries. DNAP manufactures and sells industrial explosives and related products and services to the mining industry in the Asia Pacific region, Turkey and France. Americas segment includes Dyno Nobel Americas, which manufactures and sells industrial explosives and related products and services to the mining, quarrying and construction industries in the Americas (Canada, Mexico and Chile) and initiating systems to businesses in Australia, Turkey and South Africa. It also manufactures and sells industrial chemicals.


OTCPK:ICPVF - Post by User

Post by perplexed01on Nov 08, 2018 7:22pm
175 Views
Post# 28947448

cibc downgrade target $30 down from $31 still rated neutral

cibc downgrade target $30 down from $31 still rated neutralInter Pipeline Ltd. Building Bulk
All figures in Canadian dollars, unless otherwise stated. 18-156670 © 2018   CIBC World Markets Corp., the U.S. broker-dealer, and CIBC World Markets Inc., the Canadian broker-dealer (collectively, CIBC World Markets Corp./Inc.) do and seek to do business with companies covered in its research reports. As a result, investors should be aware that CIBC World Markets Corp./Inc. may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
 For required regulatory disclosures please refer to "Important Disclosures" beginning on page 8.  Please see "Price Target Calculations" and "Key Risks to Price Target" information on page(s) 5 to 6.
 
November 7, 2018 Energy Stock Rating: NEUTRAL        Key Ratios and Statistics 12-18 mo. Price Target $30.00 IPL-TSX (11/7/18) $25.21   Key Indices: Toronto, S&P/TSX Income Trust Composite 3-5-Yr. EPS Gr. Rate (E) NM 52-week Range $20.68-$27.92 Shares Outstanding 386.7M Float 396.3M Shrs Avg. Daily Trading Vol. 1,104,817 Market Capitalization $9,749.0M Dividend/Div Yield $1.68 /  6.7% Fiscal Year Ends December Book Value $9.29 per Shr 2018  ROE (E) 16.1% LT Debt $5.3B Net Asset Value       Common Equity $3.5B            FFO per Share  2016 2017 2018 2019 Current $2.47A  $2.65A  $2.83E  $2.85E  Prior   $2.84E $2.84E    Estimates (Dec. 31) 2016 2017 2018 2019 EBITDA ($mln)-Curr $1039.8A  $1147.6A  $1247.0E  $1342.0E  EBITDA ($mln)-Prior   $1247.0E $1300.7E Div Per Share-Curr $1.57A  $1.63A  $1.69E  $1.74E  Div Per Share-Prior   $1.69E $1.74E      Valuation (Dec. 31)       P/FFO-Curr 10.2X 9.5X 7.8X 8.8X P/FFO-Prior   7.8X 8.9X EV/EBITDA-Curr 14.5X 13.1X 12.6X 12.4X EV/EBITDA-Prior   12.6X 12.8X Dividend Yield-Curr 6.2% 6.5% 6.7% 6.9% Dividend Yield-Prior   6.7% 6.9%     
     
     
 
     Company Description Inter Pipeline owns interests in conventional and oil sands pipelines, NGL extraction, and bulk liquid storage businesses. www.interpipeline.com/
 
 
 
 Our Conclusion
 
 The acquisition of NuStar Energy's European bulk liquid storage is neutral to our outlook for IPL. We view the acquisition as on strategy to build the company to a relevant size, but are puzzled by the willingness to issue equity at $20.80/share. We reiterate our Neutral rating and $30/share price target.
 
Implications
 The company has long held the view that it would either increase the relevance of the bulk liquids segment or sell it. Acquiring NuStar's European operations is in keeping with this strategy, adding $40MM (52%) in annual EBITDA to the bulk business, or 3.1% to total EBITDA. 
 
It also adds to the company's European operations, increasing capacity in that market by 33%. It also provides meaningful entry to the Amsterdam-Rotterdam-Antwerp area. The business is also substantially less contango driven than the existing assets, implying more stability of cash flows through periods when oil prices are in backwardation. Revenues are cost-of-service and fee-based.
 
We are puzzled by the company's willingness to issue equity at $20.80/share, but the amount of $200MM is relatively small. The purchase multiple equates to about 8.9x EBITDA, a reasonable price in light of the asset features. The transaction is expected to close in Q4/18 subject to customary closing conditions
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