Brookfield Infrastructure Partners LP T.BIP.UN

Primary Symbol: BIP Alternate Symbol(s): T.BIP.PR.A | T.BIP.PR.B | T.BIP.PR.E | T.BIP.PR.F | BRIPF | BIP.PR.B

Utilities Utilities - Diversified

Brookfield Infrastructure Partners L.P. is a global infrastructure company. The Company owns and operates in the utilities, transport, midstream and data sectors across the Americas, Asia Pacific and Europe. The Company’s segments include Utilities, Transport, Midstream, Data and Corporate. The Utilities segment consists of regulated transmission (natural gas and electricity) and commercial and residential distribution (electricity, natural gas, and water connections) operations. The Transport segment comprises infrastructure assets that provide transportation, storage and handling services for merchandise goods, commodities, and passengers. The Midstream segment comprises systems that provide natural gas transmission, gathering and processing, and storage services. The Data segment comprises critical infrastructure servicing customers in the telecommunications, fiber, and data storage sectors. It is also a data center provider.

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Brookfield Infrastructure Partners LP

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Post by retiredcfon Aug 04, 2023 9:10am

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Post# 35572915

TD Raise Target

To US$50.00. GLTA

Brookfield Infrastructure Partners L.P.

(BIP-N, BIP.UN-T) US$31.86

Q2/23 FFO/Unit Up 8% Y/Y; Very Attractive Valuation

Event

BIP reported Q2/23 FFO/unit of $0.72, in line with Street/TD at $0.73/$0.72.

Impact: NEUTRAL

Q2/23 Results: FFO/unit was up a healthy 8% y/y, with growth in the utilities/data segments more than offsetting slightly lower y/y results in midstream, reflecting a normalization of market-sensitive revenues, and what we would characterize as normal start-up issues at the HPC. BIP is securing mid-single-digit inflationary tariff increases in 2023, building on the high-single-digit increases captured in 2022, which will continue to compound forward, even as inflation subsides.
Marquee Data Centre Platform: BIP has already exceeded its annual capital deployment target of $1.5bln, having secured three new investments totalling ~$2bln. Most recently, BIP agreed to buy a co-controlling stake in Compass Datacenters, a leading North American data centre platform, in partnership with Ontario Teachers. The Compass deal, along with the recently closed acquisition of Data4, a European hyperscale data centre platform, plus BIP's existing data centre investments, will combine to form one of the largest global hyperscale data centre platforms. BIP expects to earn single-digit going-in yields on its recent data centre investments, which should materially improve as it develops the highly visible and large-scale growth pipelines acquired with those platforms. BIP intends to fund the capital backlog by monetizing fully operating and contracted data centres, creating a self-funding structure, and anticipates that its data investments will ultimately generate returns in the mid-to-high teens range, and perhaps even higher, depending on the success of its capital recycling initiatives.
Corporate Liquidity: BIP ended Q2/23 with $2.3bln of corporate liquidity, and, in our view, has demonstrated very flexible access to capital, including the potential to use BIPC shares as an acquisition currency (e.g., IPL/Triton deals), and the opportunity to monetize partial asset stakes (e.g., NGPL).

TD Investment Conclusion

The units yield ~5% and trade at 12.4x EV/2024E EBITDA (consensus), which is at the low-end of the 10-year range of 12.4x-16.7x, a valuation that we consider very attractive for a high-quality and well-diversified portfolio of long-life infrastructure assets, which has delivered 11% FFO/unit growth and 9% distribution/unit growth over 2012-2022.