CIBC UpgradeEQUITY RESEARCH
September 21, 2021 Earnings Update
BROOKFIELD ASSET MANAGEMENT
2021 Investor Day Update: Doubling Down...Again
Our Conclusion
BAM, along with the broader Brookfield complex, recently held its annual investor day, featuring both broad-scope presentations from the CEO, CIO, and CFO, as well as deeper dives into the asset management franchise, real estate, and credit businesses – a new format that we believe investors will appreciate given both the increased granularity and disclosure. We provide herein key updates/revisions as presented by management, as well as their (positive) impact on our investment thesis. Overall, our Outperformer thesis remains unchanged – we believe that BAM offers the attractive combination of an above-average NAV growth profile (we see a clear path to outsized AUM growth as institutional investor allocations continue to shift towards alternative assets) and a compelling valuation (the current 17% discount to NAV is overly punitive, in our view, given the growth opportunity that lies ahead). Of note, also, is the rising importance of the insurance business, with management expecting a material contribution from this segment in setting its five-year targets (and a vertical which we expect will garne rfurther importance over time).
We are increasing our NAV estimate to $63 (from $61), reflecting what is now estimated to be a $42B realized carry opportunity over the next decade, and given a maturing of early vintage carry eligible assets, greater visibility in the ultimate realization of such carry. Our price target increases in step to $67 (from $65).