Incitec Pivot Ltd T.IPL

RBC Comments this morning

[hawk35]

RBC sees two options.  Sell assets (storage or Corridor pipeline) and turn off the drip, or reduce dividend 50% and turn off the drip.  I would support either move.  Below is RBC comments.



For IPL, we expect cash flow to cover the dividend although the payout could get tighter with declining frac spreads, and we wonder if the low share price (and high yield) gives the board the opportunity to strategically cut the dividend to turn off the DRIP (i.e., a 50% cut would offset the DRIP savings and significantly minimize dilution in the share count). Another option we favourably view would be an asset monetization such as European storage and/or a full, or partial, sale of the Corridor pipeline as potentially delivering an attractive valuation and numerous other financial benefits.