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AltaGas Ltd T.ALA

Alternate Symbol(s):  ATGFF | T.ALA.PR.A | ATGPF | T.ALA.PR.B | T.ALA.PR.G | ATGAF

AltaGas Ltd. is a Canada-based energy infrastructure company that connects natural gas and natural gas liquids (NGLs) to domestic and global markets. The Company’s segments include Utilities and Midstream. Its Utilities segment owns and operates franchised, rate-regulated natural gas distribution and storage utilities, which includes four utilities that operate across five United States jurisdictions. It Utilities segment also includes storage facilities and contracts for interstate natural gas transportation and storage services, as well as the affiliated retail energy marketing business. Its Midstream segment includes global exports, which includes its two LPG export terminals; natural gas gathering and extraction, and fractionation and liquids handling. Its Midstream segment also consists of natural gas and NGL marketing business, domestic logistics, trucking and rail terminals, and liquid storage capability. Its subsidiaries include Wrangler 1 LLC, WGL Holdings, Inc. and others.


TSX:ALA - Post by User

Post by MyLaughingStockon Jun 22, 2021 7:42am
240 Views
Post# 33425872

Moving target price to $29 from $25.

Moving target price to $29 from $25. Moving target price to $29 from $25. Previously in our sum-of-the-parts valuation analysis, we were using discounted multiples to reflect: (1) uncertainty on higher returns from existing assets, (2) higher leverage, and (3) a more muted energy outlook. However, given a clearer growth outlook (with upside potential in the midstream business) and progress made on its de-leveraging plan, we bump our multiples to be more in line with peers. Our utility valuation is based on a 19.5x 2023E income (from 18x), which would be in line with our Fortis and Emera target valuations. We believe that AltaGas’ superior utility rate base growth outlook (high double-digit rate base growth) should offset the assets’ smaller size. For the midstream business we now use a 10.4x EBITDA multiple on our 2023 estimate (up from 9.3x), which would still be a discount to our 10.6x Keyera valuation. We believe AltaGas deserves at least an in-line multiple for its midstream business given its unique asset base in attractive regions and that almost 50% of its EBITDA is driven by take-or-pay or cost of services agreements
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