Incitec Pivot Ltd T.IPL

TD Waterhouse initial comments

[hawk35]

TD Waterhouse estimates storage is worth $1.2 billion not counting any premium.  Below are their comments.




Inter Pipeline Ltd.(IPL-T) C$23.64First Glance: Q2/19 Results; Exploring Sale of European Storage
 
Event
Inter Pipeline Ltd. (IPL) Q2/19 AFFO/share of $0.54 was above our forecast of $0.50
and consensus of $0.48, and below Q2/18 AFFO/share of $0.64.
Impact: SLIGHTLY POSITIVE
 
Q2/19 Results Above Forecasts: IPL Q2/19 AFFO/share of $0.54 was above our
forecasts, largely driven by a better-than-expected recovery in conventional FFO
and lower sustaining capex. The conventional business benefited from greater
midstream marketing due to increased blending activity, although the segment
continues to face some headwinds from competition on the Mid-Saskatchewan
system. Partially offsetting the conventional out-performance was lower NGL
Processing contribution due to narrower frac-spreads.
 
Potential Sale of European Bulk Storage: Concurrent with Q2/19 results, IPL
announced that it is exploring potential sales options for its European Bulk
Storage business. The business is comprised of 23 terminals across the U.K.,
Denmark, Sweden, Germany, Ireland, and the Netherlands. IPL acquired seven
of the terminals in a US$270 million transaction that closed November 30, 2018.
Proceeds from the potential sale would be used toward paying down debt and
financing the capital program, the bulk of which is comprised of the $3.5 billion
Heartland Petrochemical Complex.
 
Stock Price Movement Following Media Report: A media report released premarket
August 8, 2019 suggested that a "credible" bidder approached IPL for a
takeover bid estimated at $30/share. No further information on who the bidder is
was revealed, and IPL declined to comment on media rumors or speculation. The
same report also stated that IPL could seek so divest of its European bulk storage
business as a source of financing HPC previous to IPL's press release, estimating
possible proceeds of $1.2 billion. The stock closed at $23.64, up ~9% on the day.
 
TD Illustrative Sum of the Parts: We have included an illustrative sum-of-theparts
valuation based on our legacy estimates in Exhibit 1. We note that our
comprehensive model update to incorporate Q2/19 results, new projects, and
other factors will likely result in changes to our forecasts.
 
Conference call Friday at 11:00 am ET: Telephone:[phone], Passcode:
6363009 Replay: 1-855-859-2056, Passcode: 6363009.