Looks to Be UnanimousCIBC also raise their USD target. GLTA
EQUITY RESEARCH
August 7, 2022 Earnings Update
BROOKFIELD RENEWABLE PARTNERS LP
Capital Deployment Increases Across Global Opportunities
Our Conclusion
BEP continues to benefit from the energy transition evolution that continues
to accelerate and should see the company meet if not exceed growth targets
for the year. Funding and liquidity remains strong and should allow BEP to
execute on its ample growth opportunities. With higher expected capital
deployment, our DCF-based target ticks up to $43 from $40 previously. BEP
remains Outperformer rated.
Key Points
Capital Deployment On Track To Exceed Target. BEP commissioned
1GW and deployed/committed an additional net $650MM to its development
pipeline in Q2 (~$1.0B YTD). While all commitments might not be completed
in 2022, BEP is tracking well and could exceed its $1.0B-$1.2B annual equity
deployment target. In total, the contracted development pipeline through
2024 now stands at ~11GW (up from ~9GW in Q1/22), and the total
development backlog has increased to ~75GW (up from 69GW in Q1/22),
with demand for renewable energy as strong as ever. As expected, the new
investments are diversified across technologies and geographies, including
more energy transition investments as outlined below.
Energy Transition Investments Accelerate. BEP’s first major step out from
utility-scale renewables was Distributed Generation (DG), and the growth of
that platform is accelerating and aided by another acquisition this quarter.
The development pipeline is up >3GW, and there’s clear momentum as
relative economics have improved. Further, CCS is coming into focus. BEP’s
recent JV in California highlights its strategy for teaming with industry leading
partners in key regions, leveraging the partners’ technology/footprints while
BEP brings capital, contracting and commercialization expertise. We
anticipate increasing focus on additional energy transition technologies, such
as hydrogen, as the economics become more attractive.
Funding Remains Robust. BEP’s funding outlook remains strong with
$3.9B of liquidity at the end of Q2 and no major near-term debt maturity
obligations. Asset recycling should also continue (a handful of deals pending
that should net BEP ~$90MM) to support BEP’s funding, and the recent
closing of the inaugural Global Transition Fund should allow BEP to leverage
the scale for larger transactions. Debt financing activity also enhances
liquidity. Overall, BEP remains well positioned to execute on both organic
development and M&A.
Estimates & Valuation. Our 2022 and 2023 estimates are minimally
changed, while our longer-term forecast is increased on higher capital
deployment and development activities (greater benefit post 2023). Our DCF-
based target increases to $43 (was $40) on higher growth expectations.