Enbridge Inc T.ENB

RE:RE:Potential Risks to DCF Estimates

[Chad123]

Fantome wrote:

1finley wrote: I went through the Enbridge presentation from today and I encourage others to do the same:
2020_ENB_Day_Combined_Presentation.pdf (enbridge.com) 

What I am trying to look for is where are the key risks to Enbridge not meeting their DCF growth estimates next year and beyond. I hold about 18% of my portfolio in ENB after going all in before this recent run up.  Normally I would look to reduce this weighting as the share price increases to less then 5% of my portfolio.  For all the stocks I acquire I have a plan to hold indefintely or sell with a limit if it drops or to divest over time as the shares rise.  At this point my plan with ENB is to keep this large position unless I can find realistic risks to their performance in the short and mid term.  The worst case I see is Line 5 getting shutdown in May.  I know many here think that is very unlikely but I still would prefer to look at the worse case. A BMO analyst estimates they would suffer a roughly 3 per cent hit to its expected earnings before taxes, interest, depreciation and amortization.  While shutting down Line 5 would hurt I don't see it enough to change the ENB range of DCF estimates going forward with Line 3 coming online in 2H of next year.

Does anyone else see any significant risks I am missing?   I don't think Line 3 is at risk with the Biden adminstration.  I see the risk with Keystone XL getting shut down which actually increases the value of Line 3.  I know debt is a concern but I feel that they are on top of this based on the information provided and at this point it's manageable and don't see debt as a significant risk to their capital plan or DCF estimates.

Lastly, I have been very impressed with the executive leadership team since I started following the stock in 2017.  They are conservative, transparent, and have been implementing an impressive strategy to transition away from depending on their liquids business.  The tenure of the executive team in the presentation also demonstrates very little turnover and management stability.

 

Good analysis...

In terms of risk...there are essentially two types of risk....company specific and market...

In terms of company specific risk...I agree with your analysis and in fact...I think it was Vern... who said that Line 3 had been approved by the Obama Adminstration before all the subsequent shenanigans in MN and so given this fact it is highly likely that Biden would not stop Line 3...IMO KXL is dead in the water which only helps ENB.

WRT to Line 5....IMO...The Michigan lawsuit is a long shot in terms of winning in Court especially since the majority of the judges were appointed by Republicans.  As I posted before...for a court to agree with the state and shut down the pipe due to a bend in the pipe outside of spec and there hasn't been a spill due to that or any other factor...it would set a dangerous prededent that could allow interest groups to shut doen the who;e US economy...

In terms of market risk....I have posted a number of times on this and do have serious concerns given Government debt spending before COVID and amplified by COVID and also by Central Banks printing truckloads of money....if and when those chickens come home to roost no SP will be safe

And to back up that last paragraph....
People should listen to David....
https://www.bnnbloomberg.ca/equity-market-bubble-will-end-in-tears-rosenberg-warns-1.1533399

Good Luck